Registration No. 200301035125 (637546-D) (Incorporated in Malaysia)
NEW DIRECTIONS
Annual Report 2020 OUR VISION AND MISSION
TO PROVIDE CREATIVE SOLUTIONS IN PRECISION MANUFACTURING TECHNOLOGY AND HIGH QUALITY PERSONAL PROTECTIVE EQUIPMENT
This annual report is available on the web at www.notionvtec.com TABLE OF CONTENTS
02 11 102 CORPORATE INFORMATION SUSTAINABILITY STATEMENT LIST OF PROPERTIES
03 16 105 FINANCIAL HIGHLIGHTS CORPORATE GOVERNANCE ANALYSIS OF SHAREHOLDINGS AND OVERVIEW STATEMENT WARRANT HOLDINGS 03 CORPORATE STRUCTURE 29 109 AUDIT AND RISK MANAGEMENT ADDITIONAL COMPLIANCE 04 COMMITTEE REPORT MANAGEMENT DISCUSSION 111 AND ANALYSIS 32 NOTICE OF ANNUAL GENERAL STATEMENT ON RISK MANAGEMENT MEETING 07 AND INTERNAL CONTROL BOARD OF DIRECTORS • 35 PROXY FORM 10 FINANCIAL STATEMENTS KEY SENIOR MANAGEMENT
th 17 Annual General Meeting
PLACE Broadcast Venue, TIME Tricor Business Centre, 9.30 am, Wednesday, Manuka 2 & 3 Meeting Room, 3rd March 2021 Unit 29-01, Level 29, Tower A, Vertical Business, Bangsar South Suite, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur
Notion VTec Berhad Registration No. 200301035125 (637546-D) Annual Report 2020 02 NOTION VTEC BERHAD
CORPORATE INFORMATION
BOARD OF DIRECTORS
THOO CHOW FAH CHOO WING YEW Executive Chairman Executive Director
WILLIAM CHOO WING HONG SAW TAT LOON Managing Director Independent Non-Executive Director
JOHN CHOO WING ONN DATO’ ABU BAKAR BIN MOHD NOR Executive Director Independent Non-Executive Director
LEE TIAN YOKE ANITA CHEW CHENG IM Executive Director Independent Non-Executive Director
AUDIT AND RISK MANAGEMENT PRINCIPAL BANKERS REGISTERED OFFICE COMMITTEE Standard Chartered Bank Malaysia 12th Floor, Menara Symphony Saw Tat Loon (Chairman) Berhad No. 5, Jalan Professor Khoo Kay Kim Dato’ Abu Bakar Bin Mohd Nor Level 16, Menara Standard Chartered Seksyen 13, 46200 Petaling Jaya Anita Chew Cheng Im 30 Jalan Sultan Ismail Selangor Darul Ehsan 50250 Kuala Lumpur Tel : (603) 7890 4800 REMUNERATION COMMITTEE Tel : (603) 2781 7013 Fax : (603) 7890 4650 Fax : (603) 2142 8933 Dato’ Abu Bakar Bin Mohd Nor AUDITORS (Chairman) HSBC Bank Malaysia Berhad Saw Tat Loon 2, Jalan Tiara 2A, Bandar Baru Klang Crowe Malaysia PLT Anita Chew Cheng Im 41150 Klang, Selangor Darul Ehsan Chartered Accountants Tel : (603) 3343 6111 Suite 50-3, Setia Avenue NOMINATION COMMITTEE Fax : (603) 3344 4249 No. 2, Jalan Setia Prima S U/13S Setia Alam, Seksyen U13 Anita Chew Cheng Im (Chairperson) Hong Leong Islamic Bank Berhad 40170 Shah Alam Dato’ Abu Bakar Bin Mohd Nor Level 1, Wisma Hong Leong Selangor Darul Ehsan Saw Tat Loon 18 Jalan Perak, 50450 Kuala Lumpur Tel : (603) 3343 0730 Tel : (603) 2164 3939 Fax : (603) 3344 3036 COMPANY SECRETARIES Fax : (603) 2161 1278 STOCK EXCHANGE Tai Yit Chan (MAICSA 7009143) SHARE REGISTRAR (SSM PC No. 202008001023) Main Market of Bursa Malaysia Tricor Investor & Issuing House Tan Ai Ning (MAICSA 7015852) Securities Berhad Services Sdn Bhd (SSM PC No. 202008000067) Unit 32-01, Level 32, Tower A Shares HEAD / MANAGEMENT OFFICE Vertical Business Suite, Avenue 3 Stock Name : Notion Bangsar South, No. 8, Jalan Kerinchi Stock Code : 0083 Lot 6123 Jalan Haji Salleh 59200 Kuala Lumpur, Malaysia Warrants Batu 5 1/2, Jalan Meru, 41050 Klang Tel : (603) 2783 9299 Stock Name : Notion-WC Selangor Darul Ehsan Fax : (603) 2783 9222 Stock Code : 0083WC Tel : (603) 3361 5615 Tricor’s Customer Service Centre Fax : (603) 3361 5618 Unit G-3, Ground Floor WEBSITE Vertical Podium, Avenue 3 Bangsar South, No. 8, Jalan Kerinchi www.notionvtec.com 59200 Kuala Lumpur, Malaysia 03 ANNUAL REPORT 2020
FINANCIAL HIGHLIGHTS
The table below sets out a summary of the audited consolidated results of the Notion Group for the financial years ended 30 September 2016 to 2020:
2020 2019 2018 2017 2016 Revenue (RM’000) 242,747 237,687 255,946 275,232 230,707 Profit/(Loss) before Tax (RM’000) 6,840 14,090 67,188 14,375 17,757 Profit/(Loss) after Tax (RM’000) 6,323 7,543 47,584 12,958 5,677 Profit/(Loss) attributable to owners of the Company (RM’000) 6,323 7,543 47,584 12,958 5,677 Earning before interest, taxes, depreciation and amortisation 40,987 44,925 96,826 47,717 53,695 (EBITDA) (RM’000) No. of shares in issue (000) 504,744* 499,733^ 497,394^ 446,453^ 405,629^ Net profit/(loss) per share (Sen) 1.3* 1.5^ 9.6^ 2.9^ 1.4^
* Based on weighted average paid up share capital. ^ Restated for FYE 2016 to FYE 2019 to reflect the retrospective adjustments arising from the bonus issue completed in FYE 2020.
CORPORATE STRUCTURE
Registration No. 200301035125 (637546-D) (Incorporated in Malaysia)
100% 100% 100% 100% 100% NOVID PPE SDN NOTION NOTION KAITEN SWISS BHD (FORMERLY (THAILAND) VENTURE PRECISION IMPRESSION KNOWN AS CO LTD (HONG KONG) (M) SDN BHD SDN BHD TRENDI NOTION LIMITED SDN BHD)
100% 100% 100% 100% 100% DIAPHRAGM NV INTECH NOTION NOTION TECH TECHNOLOGY PRECISION VENTURE INTERNATIONAL SDN BHD SDN BHD SDN BHD SDN BHD (M) SDN BHD
100% AUTIC MEKKI SDN BHD 04 NOTION VTEC BERHAD
MANAGEMENT DISCUSSION & ANALYSIS
The company implemented a bonus issue of 168,325,033 new ordinary shares of NVB on the basis of 1 bonus ordinary shares for every 2 existing ordinary shares held.
THOO CHOW FAH | Executive Chairman
OUR GROUP DIVERSIFICATION
Our Group supplies high precision, engineered, ready to Our performance was affected when Movement Control Order assemble turned, milled, drilled and ground parts to renowned was imposed during which our production was temporary multi nationals all over the world. suspended. Upon resuming operations in 2020, we were only allowed to operate at 50% capacity. We were also affected We stand for complete service with a fast response time to by supplies chain disruption and logistic challenges due to customers’ needs. We provide a complete spectrum of services border restrictions. Overall revenue generated during the from design to production, tooling development, quality individual quarter ended 30 June 2020 fell by 30% compared assurance, surface coating and finishing, heat treatment to the preceding quarter. and logistics. Amid global uncertainty and volatility in the demand of our Recently we started producing masks under our own brand products and services, we decided to venture into the PPE names and have sought shareholders’ approval for diversifying sector to provide us with a more diversified income stream into the Personal Protective Equipment (PPE) business, for future growth. We started with the manufacture of certified predominantly gloves, which will be elaborated in the next face masks but upon further deliberation and accessing the section. market, we decided to venture into the glove business given the increasing demand from the healthcare and related sector. With approximately 2,000 employees, we currently operate at 6 facilities. Three factories located on 17 acres, collectively on Nevertheless, we will continue to focus on our existing core our own freehold land in Meru, Klang, three separate factories business of supplying high quality precision components. We occupying in total 12 acres of land, collectively in Ayutthaya, shall continue with the production of face masks although Thailand, and rented premises in Gelang Patah, Johor to serve we do not foresee a major contribution from this business to the southern region and Singapore. our future earnings until the N95 respirators business is in full production.
Our Products
Our products can be broken down to four main segments:
(1) Hard Disk Drive (HDD) (2) Automotive (Braking System) (3) Engineered Products (Camera SLR interchangeable lens, Electronics Manufacturing Services (EMS) and others) (4) PPE 05 ANNUAL REPORT 2020
MANAGEMENT DISCUSSION & ANALYSIS (CONT’D)
RM98.2 RM79.0 RM62.0 RM3.6 MILLION MILLION MILLION MILLION
Hard Disk Drive Automotive Engineered Personal (HDD) (Braking System) Products Protective Equipment (PPE)
FINANCIAL AND OPERATIONS REVIEW Liquidity, Earning and Investment
Financial Performance Borrowings of our group as at 30 September 2020 was approximately RM 64.3 million with a low gearing ratio of What a year! Plagued by a pandemic and subsequent approximately 15%. imposition of Movement Control Order as highlight earlier. Cash and cash equivalent, as at 30 September 2020 is a healthy Sales revenue for the financial year 2020 was higher at RM RM 82.7 million. 242.7 million than what was achieved in 2019 of RM 237.7 million. Most of the segments recorded lower revenue other For this financial year, our group invested RM 36.3 million in than the EMS and others. This is mainly due to higher sales capital expenditure. from a particular customer in the 4th quarter of the year.
CORPORATE EXERCISES Revenue 2020 2019 The company implemented a bonus issue of 168,325,033 new RM’000 % RM’000 % ordinary shares of NVB on the basis of 1 bonus share for every 2 existing ordinary shares held. HDD 98,184 40.4 101,012 42.5 Automotive 78,962 32.5 92,561 38.9 The said shares were listed on 18 May 2020. Engineered Products - Camera 11,826 4.9 16,615 7.0 DIVIDEND - Others (including EMS) 50,171 20.7 27,499 11.6 PPE 3,604 1.5 - - Due to the global economic uncertainty, our Board has taken Total 242,747 100 237,687 100 a prudence stance and will not be declaring any dividend for year 2020. Profit after tax was RM 6.3 million compared to 2019 at RM 7.5 million. Despite our healthy cash position, we are constantly mindful of a need to strike a balance between conserving resources Earnings before interest, taxes, depreciation and amortisation for expansion and paying regular dividend. (EBITDA) stood at RM 41 million for the financial year ended 2020. We seek your patience and would like to assure our shareholders that when the situation improved and stabilized, we will resume implementing our 30% dividend policy, where a minimum of 30% of our group’s Profit after tax shall be distributed to shareholders. 06 NOTION VTEC BERHAD
MANAGEMENT DISCUSSION & ANALYSIS (CONT’D)
OUTLOOK
According to Conference Board, the global economy is climbing out from the depths to which its plummeted during the great lockdown in March 2020. But with the Covid 19 pandemic continue to spread, many countries have slowed reopening and some are reinstating partial lockdown to protect susceptible populations. While recovery in China has been faster than expected, the global economy’s long ascent back to pre pandemic level of activity remains prone to setbacks.
Based on the Organization for Economic Cooperation and Development (OECD), the global economy will gain momentum over the coming 2 years, with global GDP at pre pandemic level by the end of 2021. After a sharp decline this year, global GDP is projected to rise by around 4.2% in 2021 and a further 3.7% in 2022.
RISKS It also highlighted that for the first time since the pandemic began, there is hope for the future, due to news of effective Some immediate key risks related to our Group’s operations vaccines, but the near term outlook remains very uncertain. are as follows: As the saying goes “In Every Crisis, there is an opportunity’’. 1. Over reliance on a few key customers. We have over the We will be focusing on our strength in our manufacturing last few years started supplying to other customers in capacities and search for these nuggets of opportunities. different sectors and will actively continue to do so. We expect the HDD segment to continue to grow but mainly 2. The strength/weakness of USD will bear strongly on the in the enterprise bulk storage segment. Group’s future as an exporter. Our Automotive segment is anticipated to remain stagnant as 3. Quality Assurance (QA) and Quality Control. The failure the electrical vehicles will be the main area of growth. to address this risk could result in higher percentage of rejects which could affect the profit margins. To further This financial year we have made headways in the new improve on our existing controls, we will assess if there is extruded and machined aluminum parts and expecting more a need for a central plant QA function to include oversight orders from our EMS segment customers. We hope that these and control over the plants and to establish a core team segment will provide us with a double digit growth. of relevant leaders to conduct regular monthly review. As for our PPE segment, we will focus on the sales of the 4. Fluctuating prices of aluminium (our main raw material). N95 masks and trading of the nitrile gloves. We expect to manufacture our own gloves by June 2021. We are confident 5. Some of our customers may be affected by the ongoing that the demand of PPE will still be strong despite the trade war between the USA and China. emergence of the vaccines which will take a long time to roll out and the further need of using face mask and gloves become 6. Diversification into PPE and the risks associated with a new norm post Covid 19. that such as competition, licensing, technological advancement. 07 ANNUAL REPORT 2020
BOARD OF DIRECTORS
THOO CHOW FAH WILLIAM CHOO WING HONG JOHN CHOO WING ONN Executive Chairman Managing Director Executive Director
Malaysian Male 68 Malaysian Male 56 Malaysian Male 54
Mr Thoo Chow Fah was first appointed Mr William Choo Wing Hong was first Mr John Choo Wing Onn was first to the Board on 8 February 2005. In his appointed to the Board on 8 February appointed to the Board on 8 February capacity as Executive Chairman, Mr 2005. In his capacity as Managing 2005. His key role is in maintaining Thoo’s key role is the macro management Director, Mr William Choo plays a key key HDD manufacturer accounts and and investors’ relation of the Group. role in executing the strategic growth the constant monitoring and satisfying and development plans of the Group. He customer’s need of quality components. He commenced his career with Sime is the key technical person of the Group. Darby Plantations in 1978. He has worked at American Express Prior to setting up Notion Venture Sdn Malaysia Sdn Bhd, Kuala Lumpur Subsequently, in 1990 he joined Sinar Bhd, the principal manufacturing arm of and Schering AG Petaling Jaya and Mas group, one of the largest private the Group in 1995, he has garnered more subsequently joined Schering Plough plantation groups in Indonesia. than 21 years of CNC precision machining Sdn Bhd in various sales capacity. experience at Fujitsu Electronics Sdn He left the group in 1995 before setting Bhd, Johor, TPK Engineering Pte Ltd, He obtained his Certificate in Marketing up his own palm oil factory engineering Singapore, Motorola (M) Sdn Bhd, from the Chartered Institute of consultancy. Sungei Way, Yamazen Sdn Bhd, Selangor Marketing, United Kingdom, in 1993. and Preciturn Sdn Bhd, Bangi. Mr Thoo graduated from the University Other than Notion VTEC Berhad, he He also heads the R&D division of the of Strathclyde, Glasgow, Scotland with does not hold any directorship in other Notion Group which provides technical a Bachelor’s degree in Mechanical public companies and listed issuers. research on and development of new Engineering. He also has a Master’s machining methods, new production degree in Management Science from methods and engineering processes. Imperial College, University of London. Mr William Choo obtained his Diploma Other than Notion VTEC Berhad, he does in Mechanical Engineering from the not hold any directorship in other public Federal Institute of Technology, Kuala companies and listed issuers. Lumpur in 1985.
Other than Notion VTEC Berhad, he does not hold any directorship in other public companies and listed issuers. 08 NOTION VTEC BERHAD
BOARD OF DIRECTORS’ PROFILE (CONT’D)
LEE TIAN YOKE CHOO WING YEW SAW TAT LOON Executive Director Executive Director Independent Non-Executive Director
Malaysian Male 50 Malaysian Male 59 Malaysian Male 50
Mr Lee Tian Yoke was first appointed to Mr Choo Wing Yew was first appointed to Mr Saw Tat Loon was first appointed the Board on 8 February 2005. He heads the Board on 10 November 2009. to the Board on 9 February 2005. He the marketing team of the Notion Group, is also Chairman of the Audit and Risk where his concentration is on non-HDD He is a member of the Chartered Management Committee as well as projects. Institute of Management Accountants, a member of the Remuneration and United Kingdom and the Malaysian Nomination Committees. Mr Lee commenced his sales career Institute of Accountants. He started in Mechcraft Trading Sdn Bhd, his professional career with Deloitte He was previously with Crowe Horwath, Kuala Lumpur. During his tenure with Kassim Chan & Co., a public accounting Chartered Accountants for 4 years in Mechcraft, he had made valuable firm in 1983. Later in 1990, he moved which he undertook a variety of audit contacts with many MNCs wanting to into financial management positions in assignments. localize the manufacture and supply various corporations including public of component parts. In 1995, he moved companies. He was also extensively involved in a to Preciturn Sdn Bhd where he was in successful public listing exercise on charge of customer relations and new Mr Choo joined the Notion Group as Hong Kong Stock Exchange in 1999. project development. Financial Controller in May 2005 and is Subsequently, he joined a global media the key financial person of the Group. specialist in 2000 as a Finance Manager, He received his Certificate in Marketing overseeing the group financial reporting, from HELP Institute, Kuala Lumpur in Other than Notion VTEC Berhad, he does Sarbanes-Oxley’s compliance and 1994. not hold any directorship in other public treasury functions. In 2008, he continued Other than Notion VTEC Berhad, he does companies and listed issuers. his career with a petrochemical company not hold any directorship in other public as a Financial Controller, responsible companies and listed issuers. for the group financial and treasury management.
He is a member of the Malaysian Institute of Accountants and fellow member of the Association of Chartered Certified Accountants.
Other than Notion VTec Berhad, he does not hold any directorship in other public companies and listed issuers. 09 ANNUAL REPORT 2020
BOARD OF DIRECTORS’ PROFILE (CONT’D)
DATO’ ABU BAKAR BIN ANITA CHEW CHENG IM Notes to Directors’ profile: MOHD NOR Independent Non-Executive Director 1. Family Relationships Independent Non-Executive Director William Choo Wing Hong, John Choo Wing Onn and Choo Wing Malaysian Female 54 Yew are siblings. They are also Malaysian Male 67 brothers-in-law of Mr Thoo Chow Fah. Ms Anita Chew Cheng Im was first Dato’ Abu Bakar Bin Mohd Nor was appointed to the Board on 29 June 2007. The other Directors do not have appointed to the Board on 7 May 2018. He She is the Chairperson of the Nomination any family relationship with any is also a Chairman of the Remuneration Committee as well as a member of Director and/or major shareholders Committee as well as a member of the Audit and Risk Management and of the Company. the Audit and Risk Management and Remuneration Committees. Nomination Committees. 2. Conflict of Interest She started her career as an audit None of the Directors has any Dato’ Abu Bakar started his career assistant at KPMG, Melbourne in 1989. conflict of interest with the as Deputy Chief Internal Auditor in In 1992, she joined the corporate finance Company. Bank Bumiputra Malaysia Bhd for a department of Bumiputra Merchant year. Subsequently, he joined Malaysia Bankers Berhad and subsequently 3. Conviction of Offences Mining Corporation in the Tin Marketing worked at Alliance Investment Bank None of the Directors has any Department in 1981. In 1982, he joined Berhad and HwangDBS Investment conviction for offences within the Perbadanan Nasional Berhad (PERNAS) Bank Berhad. She was involved in most past 5 years. as a General Manager in Corporate related areas of corporate finance work Services for a period of 8 years. He was during her 15 years tenure in the various 4. Attendances at Board Meetings formerly the Chief Executive Officer investment banks, having advised clients The details of the Directors’ of Peremba Berhad for three years. on IPO, fund raising and corporate attendance at Board Meetings are He then joined Landmarks Berhad as restructuring exercises. Her last held set out on page 17 of this Annual an Executive Director for one year. He position at HwangDBS was senior vice Report. was also served as Managing Director president, equity capital market. of Tradewinds (M) Berhad from 1994 5. Shareholdings to 1996. During the same year, he Ms Anita Chew graduated from Monash The details of the Directors’ interest joined Saujana Consolidated Berhad University, Australia with a Bachelor in the securities of the Company as Managing Director and also act as a of Economics degree majoring in are set out on page 105 of this member of the Audit Committee until Accounting. Annual Report. March 2009. Currently, he serves on the Board of Saujana Hotel Sdn Bhd, She also sits on the Boards of MK Land which owns The Saujana Kuala Lumpur. Holdings Berhad, K-One Technology He also sits on board of various other Berhad, SKP Resources Berhad and private limited companies involved in Fortess Minerals Ltd, a Company listed the hotel and leisure industry. He is on the Singapore Stock Exchange. also a Director of University Technology Malaysia (UTM).
He graduated with a B. Sc (Hons) in Business Administration Accounting from University of Wales in 1976, and is a Chartered Accountant, Institute of Chartered Accountant, England and Wales.
Other than Notion VTec Berhad, he does not hold any directorship in other public companies and listed issuers. 10 NOTION VTEC BERHAD
KEY SENIOR MANAGEMENT
THOO CHOW FAH Sungei Way, Yamazen Sdn Bhd, Selangor Mr Lee commenced his sales career Executive Chairman and Preciturn Sdn Bhd, Bangi. in Mechcraft Trading Sdn Bhd, Kuala Lumpur. During his tenure with He also heads the R&D division of the Mechcraft, he had made valuable Malaysian Male 68 Notion Group which provides technical contacts with many MNCs wanting to research on and development of new localize the manufacture and supply machining methods, new production of component parts. In 1995, he moved Mr Thoo Chow Fah was first appointed methods and engineering processes. to Preciturn Sdn Bhd where he was in to the Board on 8 February 2005. In his charge of customer relations and new capacity as Executive Chairman, Mr Mr William Choo obtained his Diploma project development. Thoo’s key role is the macro management in Mechanical Engineering from the and investors’ relation of the Group. Federal Institute of Technology, Kuala He received his Certificate in Marketing Lumpur in 1985. from HELP Institute, Kuala Lumpur in He commenced his career with Sime 1994. Darby Plantations in 1978. JOHN CHOO WING ONN Subsequently, in 1990 he joined Sinar Executive Director CHOO WING YEW Mas group, one of the largest private Executive Director plantation groups in Indonesia. Malaysian Male 54 He left the group in 1995 before setting Malaysian Male 59 up his own palm oil factory engineering consultancy. Mr John Choo Wing Onn was first appointed to the Board on 8 February Mr Choo Wing Yew was first appointed to Mr Thoo graduated from the University 2005. His key role is in maintaining the Board on 10 November 2009. of Strathclyde, Glasgow, Scotland with key HDD manufacturer accounts and a Bachelor’s degree in Mechanical the constant monitoring and satisfying He is a member of the Chartered Engineering. He also has a Master’s customer’s need of quality components. Institute of Management Accountants, degree in Management Science from United Kingdom and the Malaysian Imperial College, University of London. He has worked at American Express Institute of Accountants. He started Malaysia Sdn Bhd, Kuala Lumpur his professional career with Deloitte and Schering AG Petaling Jaya and Kassim Chan & Co., a public accounting WILLIAM CHOO WING HONG subsequently joined Schering Plough firm in 1983. Later in 1990, he moved Managing Director Sdn Bhd in various sales capacity. into financial management positions in various corporations including public He obtained his Certificate in Marketing companies. Malaysian Male 56 from the Chartered Institute of Marketing, United Kingdom, in 1993. Mr Choo joined the Notion Group as Financial Controller in May 2005 and is Mr William Choo Wing Hong was first the key financial person of the Group. appointed to the Board on 8 February LEE TIAN YOKE 2005. In his capacity as Managing Executive Director Director, Mr William Choo plays a key role in executing the strategic growth and development plans of the Group. He Malaysian Male 50 is the key technical person of the Group.
Prior to setting up Notion Venture Sdn Mr Lee Tian Yoke was first appointed to Bhd, the principal manufacturing arm of the Board on 8 February 2005. He heads the Group in 1995, he has garnered more the marketing team of the Notion Group, than 21 years of CNC precision machining where his concentration is on non-HDD experience at Fujitsu Electronics Sdn projects. Bhd, Johor, TPK Engineering Pte Ltd, Singapore, Motorola (M) Sdn Bhd, 11 ANNUAL REPORT 2020
SUSTAINABILITY STATEMENT
Our group recognises its social responsibility to integrate sustainability into its culture and its respect for community, employees, shareholders, customers, suppliers and the environment, based on ethical values.
We believe in conducting business in a socially responsible and ethical manner; protecting the environment and safety of its people; and engaging, learning from, respecting, and supporting the communities and cultures with which we work.
We have adopted a policy which could be applied into our operational activities and our employees day-to-day work activities. The Board and Management will act as role models by incorporating considerations and values that are sustainable into decision-making in all business activities and will ensure that appropriate organisational structures and systems are in place to effectively identify, monitor, and manage issues and performance relevant to the Group’s businesses.
OBJECTIVE & SCOPE
The objective of this sustainability statement is to share the Group’s sustainability initiatives and practices in the area of Economics, Environment and Social.
This Statement covers the period between 1 October 2019 to 30 September 2020, and in accordance with the principal guidelines of Bursa Malaysia Sustainability Reporting Guide.
CORPORATE GOVERNANCE PRACTICES
We endeavour to comply with most of the recommendations as provided in the MCCG 2017. We have policies in the code of ethics and conduct of management and employees and whistle blowing policy which we have disclosed on our website.
GOVERNANCE STRUCTURE
The Board of Directors sets the tone in determining our Group’s sustainability strategies and goals.
A Sustainability Working Group (“Working Group”) has been set up comprising the Chairman, Executive Director, Operations Manager and Accounts Executive to manage and monitor the implementation of initiatives whilst developing more practices. 2020 has been a challenging year for most companies including ours. Our group including the Working Group had to grapple with the pandemic and the temporary closure of the factories during the MCO. At the same, the Group pivoted to the manufacturing of PPE which was time consuming and hence, less resources and attention were given to the gathering of data for measurement. The Working Group has however committed to do so when the new businesses stabilized and pandemic is under control. 12 NOTION VTEC BERHAD
SUSTAINABILITY STATEMENT (CONT’D)
ECONOMICS
1. Efficiency
We are constantly looking for ways to improve the efficiency of our production. Over the last 2 years, we have successfully combined several machine processes into one, which will involve less labour.
2. Certification
We have obtained the ISO 9001 and ISO 14000 certification. ISO 9001 is an international standard that specifies requirements for a quality management system where as ISO 14000 standards provide a framework for organisations to systemise and improve their environmental management rules.
The IATF 16949 which we also obtained in order to supply to our automotive clients in Europe. We have also started early adoption of RBA standard – Responsible Business Alliance. This standard is required to be met by most multinational customers.
Our subsidiary has also recently obtained a certification of registration from US based Registrar Corp stating that it is registered with the US FDA as a face mask manufacturer.
3. Stakeholders
i) Shareholders
AGM – Our Chairman will discuss the Group’s performance and outlook, and our meeting is usually robust as we encourage questions from the minority shareholders
Investors Briefing – During this period, our Chairman held at least 4 virtual analyst briefings, after the announcements of our quarterly results and more than a dozen follow ups.
Media – We also promote our Group by engaging with the local media to provide a better understanding of our business model and activities.
ii) Customers
We welcome our customers to our factories for inspiration and hold dialogues with regards to product innovation and quality in order to minimise rejects.
These interactions are important in order to build sustainable relationships.
iii) Suppliers
We conduct regular visits and hold constant meetings to ensure competitive pricing, transparent procurement processes and ethical practices. 13 ANNUAL REPORT 2020
SUSTAINABILITY STATEMENT (CONT’D)
ENVIRONMENT
We believe in protecting the health and safety of all individuals affected by our activities, including our employees, contractors and the public. We provide a safe and healthy working environment and will not compromise the health and safety of our employees.
Our management and employees are responsible and accountable for contributing towards a safe working environment including fostering safe working attitudes and operating in an environmentally responsible manner.
We value the importance of pollution prevention, biodiversity, environmental protection and also resource conservation, which are essential to a sustainable environment. To this end, we have complied with the European Union’s policy on the restriction use of hazardous substance in electrical and electronic equipment, which came to effect in June 2007. We shall continue to work with industry peers and suppliers to identify technologies and processes that will help to reduce hazardous substances in our manufacturing processes and products. We will further ensure that our suppliers understand and are also committed to comply with the policy.
Reusing and recycling of office stationery and paper, switching off the lights and air conditioners when they are not in use are among some of the conservation measures taken by our Group.
We are committed to manage our other resources.
Water – to value the amount of water utilised throughout our manufacturing facilities – to ensure that water discharged into the environment is clean – to ensure no leakage, in that end, rain water is being harvested for general washing
Energy – raise awareness among employees on maximising productivity and minimise waste – extensive use of cost saving LED
Pollution – a chemical scrubbing system was installed to neutralise the chemical for safe discharge of air
Oil – recycling of oil and lubricant is crucial due to heavy usage of machining – an air demister was also installed to improve the condition of the air in the factories
Aluminium – represents approximately 40% of our production cost – production waste and leftovers will be recycled 14 NOTION VTEC BERHAD
SUSTAINABILITY STATEMENT (CONT’D)
SOCIAL
Employees
Our management apply fair labour practices, while respecting the laws of countries and communities in which we operate. We treat our employees fairly and with dignity. We also take their goals and aspirations into consideration while ensuring that diversity in the workplace is embraced. We believe in providing equal opportunity in all aspects of employment and will not tolerate unlawful workplace conducts, including discrimination, intimidation, or harassment at workplace.
Our company has a formal policy formulated in 2015 for its workforce.
We are committed to manage diversity, which may result from a range of factors including age, gender, ethnicity, nationality, sexual orientation, cultural background or other personal factors, as a means of enhancing the Group’s performance by recognising and utilising contribution of diverse skills and talents from its directors, officers, and employees.
We practice diversity as can be seen in our multiracial and multi national gender balance workforce with ages of employees.
(i) By gender as at 30 September 2020 (iii) Recruitment for the year ended 30 September 2020
25
1,560 19
579
Male Female Male Female
(ii) By age as at 30 September 2020
528 25 years old and below 947 Between 26 – 35 years old 517 Between 36 – 45 years old 126 Between 46 – 55 years old 21 Above 55 years old 15 ANNUAL REPORT 2020
SUSTAINABILITY STATEMENT (CONT’D)
(iv) Training and Development
We manage our staff development to undertake professional and personal development that enhance skills, and understanding
For the financial year ended 30 September 2020 the employees attended the following training programmes:
– Anti-bribery and anti-corruption workshop – Scheduled Waste Management – Failure Mode Effects Analysis – Internal Quality Auditing
(v) Health and Safety
We placed a very high emphasis on the health and safety of our employees. An emergency team has been set up, led by an Incident Commander and a team of floor wardens, first aiders, search and rescuers.
Since our fire in 2017, we have also redesign and improved our factory layout with less congestion and better ceiling materials. We have also equipped ourselves with fire fighting equipments. We also take other measures like segregating the “hot” works i.e. welding and grinding. There has been no work accidents during the year under review.
Since the outbreak of the Covid 19, our Group has set up stringent standard operating procedures in compliance with the Ministry of Health requirements.
Community
We acknowledged our obligations to the local community. In the past, we have conducted training programmes for undergraduate students from vocational schools. We have also made charitable contributions for social welfare activities. 16 NOTION VTEC BERHAD
CORPORATE GOVERNANCE OVERVIEW STATEMENT
The Board of Directors recognises the importance of adopting high standards of corporate governance throughout the Company and the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders’ value and the Group’s financial performance.
The Board is committed to implement the Malaysian Code on Corporate Governance 2017 (“MCCG 2017” or “the Code”) wherever applicable and appropriate in the best interest of the shareholders of the Company.
This Corporate Governance Overview Statement (“Statement”) sets out how the Company has applied the Principles of the Code and observed the Recommendations supporting the Principles and is to be read together with the Corporate Governance Report 2020 (“CG Report”), which is available for reference on the Company’s corporate website at www.notionvtec.com as well as announcement made on the website of Bursa Malaysia Securities Berhad (“Bursa Securities”) and in conjunction with the other statements in the Annual Report (for example, Statement on Risk Management and Internal Control, Audit and Risk Management Committee Report and Sustainability Statement). Where a specific Recommendation of the MCCG 2017 has not been observed during the financial year under review, the non-observance – including the reasons thereof and where appropriate, the alternative practice, if any, is mentioned in this Statement.
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS
I. BOARD RESPONSIBILITIES
1. Board’s Roles and Responsibilities
The Board is led by the Executive Chairman and is supported by experienced Board members with a wide range of expertise, who play an important role in the stewardship of the direction and operations of the Group.
The Board is primarily responsible for the strategic direction of the Group. It delegates to and monitors the implementation of these directions by the Management.
The responsibilities of the Board include, inter-alia, the following:
(a) Review and adopt a strategic plan for the Group.
• The Board reviews the annual business plan and budgets and regularly monitors their progress throughout the year, using appropriate financial indicators and industry benchmarks. • The Board reviews the challenges of the Group’s business and approves the Management’s proposed strategic plan for the Group.
(b) Oversee the conduct of the Group’s businesses to evaluate whether the businesses are being properly managed.
• The Board guides the performance of the Group’s business, not just year-to-year but in the long term.
(c) Identify principal risks and ensure the implementation of appropriate systems to manage these risks.
• The Board reviews the system and processes as well as the key responsibilities and assesses for reasonable assurance that the risks have been managed.
(d) Review the adequacy and the integrity of the Group’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines. Please refer to Statement on Risk Management and Internal Control for further details. 17 ANNUAL REPORT 2020
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)
I. BOARD RESPONSIBILITIES (CONT’D)
1. Board’s Roles and Responsibilities (Cont’d)
(e) Ensure the integrity of the Company’s financial and non-financial reporting.
(f) Succession planning – including appointing, training, fixing the compensation of and, where appropriate, replacing key management.
(g) Develop and implement a Corporate Disclosure Policy for the Group.
• The Company’s Executive Chairman, Executive Directors and Non-Executive Directors communicate with shareholders and respond to questions in relation to, amongst others, the corporate vision, strategies and developments, future prospects, financial results, business plans and operational matters during the Company’s Annual General Meeting (“AGM”). • The Board reviews the Corporate Disclosure Policy and Procedures as and when need arises.
In discharging its duties, the Board delegates certain of its responsibilities to the Board Committees, namely Audit and Risk Management Committee (“ARMC”), Nomination Committee (“NC”) and Remuneration Committee (“RC”) which operate within defined Terms of Reference. The Chairman of the respective Board Committees report to the Board on key matters deliberated at the respective Board Committee meetings and makes recommendations to the Board for final decision, where necessary.
The Board conducts at least five meetings in each financial year. An annual meeting calendar is prepared and circulated to the Directors before the beginning of each year to help the Directors plan their schedule ahead. Additional meetings are also held as and when required. Scheduled Board meetings are structured with pre-set agendas. Board and Board Committee papers prepared by the Management provide the relevant facts and analysis for the Directors’ information. The meeting agenda, the relevant reports and Board papers are furnished to the Directors and Board Committee members before the meeting to allow the Directors sufficient time to read for effective discussion and decision making at the meetings.
The Board adheres to the Recommendation of the Code, which requires the Directors to notify the Chairman, including an indication of time that will be spent in the new appointment, before accepting any new directorship. The information on their directorships will be shared with the Board in a quarterly update.
The Board is satisfied with the level of time commitment given by the Directors in fulfilling their roles and responsibilities. Details of the Board members’ attendance at the Board and Board Committee meetings for the financial year ended 30 September 2020 are as follows:
Director Board ARMC NC RC Thoo Chow Fah 7/7 - - - William Choo Wing Hong 6/7 - - - John Choo Wing Onn 7/7 - - - Lee Tian Yoke 7/7 - - - Choo Wing Yew 7/7 - - - Saw Tat Loon 7/7 5/5 1/1 1/1 Anita Chew Cheng Im 7/7 5/5 1/1 1/1 Dato’ Abu Bakar Bin Mohd Nor 7/7 5/5 1/1 1/1 18 NOTION VTEC BERHAD
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)
I. BOARD RESPONSIBILITIES (CONT’D)
2. Board Charter
In August 2020, the revised Board Charter were tabled and approved by the Board to ensure it is always in line with the Corporate Governance Practices set out in MCCG 2017 and Bursa Securities’ Main Market Listing Requirements (“MMLR”).
The Board adopts the Board Charter which outlines the manner in which its constitutional powers and responsibilities are exercised and discharged, having regard to principles of good corporate governance, international best practices and applicable laws.
It also established to provide guidance and clarity on the Board’s roles and responsibilities as well as the powers between the Board and the Management, the different committees established by the Board, as well as between the Chairman and Managing Director.
The Board Charter can be viewed on our website at www.notionvtec.com. The Board will review the Board Charter and make necessary amendments as and when required to ensure they remain consistent with the Board’s objectives, current law and practices. Any updates to the principles and practices set out in this Charter will be made available on the Company’s website.
3. Code of Conduct and Code of Ethics
The Company has also set out a Code of Conduct and Code of Ethics (“the Codes”) for its Directors, management and employees. The Codes are established to promote the corporate culture which engenders ethical conduct that permeates throughout the Group. In May 2020, the Company has adopted Anti-Bribery and Corruption Policy to manage bribery and corruption risks of the Group as guided by the Guidelines on Adequate Procedures issued pursuant to Section 17A(5) of the Malaysian Anti-Corruption Commission Act 2009.
The Code of Conduct has subsequently been reviewed and revised in August 2020 to ensure it is aligned with the Anti- Bribery and Corruption Policy. The Codes shall be reviewed as and when required, summary of which is available on the corporate website at www. notionvtec.com.
4. Whistleblowing Policy and Procedure
The Company has adopted a Whistleblowing Policy and Procedure as the Board believes that a sound whistleblowing system will strengthen, support good management and at the same time, demonstrate accountability, good risk management and sound corporate governance practices. The policy is to encourage reporting of any major concerns over any wrongdoings within the Group.
The Whistleblowing Policy and Procedure, which was adopted by the Board in May 2013 and reviewed by the Board in June 2020, provides an avenue for any directors, managers, officers and employees to report on any allegations of suspected improper activities, including those relating to financial reports, unethical or illegal conduct on a confidential basis.
The policy outlines the relevant procedures such as when, how and to whom a concern may be properly raised about the genuinely suspected or instances of wrongdoing at the Company and its subsidiaries. The identity of the whistleblower is kept confidential and protection is accorded to the whistleblower against any form of reprisal or retaliation. All such concerns shall be set forth in writing and forwarded in a sealed envelope to either the Chairman of the ARMC (for matter relating to financial reporting, unethical or illegal conduct) or Head of Human Resources (for employment-related concerns). 19 ANNUAL REPORT 2020
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)
I. BOARD RESPONSIBILITIES (CONT’D)
5. Sustainability of Business
The Board is mindful/ aware of the importance of business sustainability, and takes into consideration the impact on the environment, economics and social aspects in conducting the Group’s businesses. The Group also embraces sustainability in its operations.
6. Clear Functions of the Board and Management
The Executive Chairman leads the Board and is responsible for the leadership, effectiveness, conduct and governance of the Board.
The Managing Director executes the Group’s business plans, policies and decisions adopted by the Board and oversees as well as manages the day-to-day operations of the Group. The heads of divisions are responsible for supporting and assisting the Managing Director in implementing and running the Group’s day to day business.
The Independent Non-Executive Directors are actively involved in the various Board Committees and contribute significantly to areas such as performance monitoring and enhancement of corporate governance and controls. They provide a broader view, independent assessment and opinions on management proposals.
7. Clear Division of Roles
There is a clear division of responsibilities between the Chairman and Managing Director, who also assumes the role of the Chief Executive Officer (“CEO”), to ensure that there is a balance of power and authority. In ensuring this balance, the positions of the Chairman and Managing Director are held by separate members of the Board as recommended under the Code.
Mr Thoo Chow Fah, the Chairman of the Board, is responsible for, among others, the exercise of control over quantity, quality and timeliness of the flow of information between the management of the Company and the Board. He also schedules Board meetings, oversees the preparation of the agenda for Board meetings and assists in ensuring adherence to the Group’s guidelines on corporate governance.
He is assisted by the Managing Director, Mr William Choo Wing Hong, who also assumes the role of the CEO. Mr William Choo, together with the other Executive Directors and Management comprising each subsidiary’s general managers and key senior managers, are responsible for the day-to-day management of the Group.
The separation of the roles of the Chairman and CEO ensures a balance of power and authority such that considerable concentration of power does not lie with any one individual.
8. Directors’ Training
All Directors have completed the Mandatory Accreditation Programme as required by Bursa Securities.
The Board believes that continuous training for Directors is vital for the Board members to enhance their skills and knowledge and to enable them to discharge their duties effectively. As such, the Directors will continuously attend the necessary training programmes, conferences, seminars, exhibitions and/or forums to keep abreast with the current developments in the various industries as well as the current changes in laws and regulatory requirements. 20 NOTION VTEC BERHAD
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)
I. BOARD RESPONSIBILITIES (CONT’D)
8. Directors’ Training (Cont’d)
During the financial year, our Board members attended several relevant seminars, exhibitions, forums and training programmes as follows:
– “Design Thinking” by Pete Wee in connection with Equities Trackers – Anti-Bribery and Anti-Corruption workshop by NGL Tricor Governance Sdn Bhd – Corruption Risk Assessment workshop by NGL Tricor Governance Sdn Bhd – 2020 Economic and Strategic View by Standard Charted Bank Malaysia Berhad – MIA Conference 2019 by Malaysian Institute Of Accountant (MIA) – Malaysia Tax Budget 2020 by Crowe CPE Sdn Bhd
The Board will continuously evaluate and determine the training needs of its members to assist them in the discharge of their duties as Directors.
9. Qualified and Competent Company Secretary
The Board believes that the current Company Secretaries are capable of carrying out their duties to ensure effective functioning of the Board. The terms of their appointment permits their removal and appointment of successor as a matter for the Board as a whole to decide. The Company Secretaries ensure that all Board and Board Committee meetings are properly convened and that records of the deliberations, proceedings and resolutions passed are properly recorded and statutory registers are properly maintained at the registered office of the Company.
The full Board or in their individual capacity in furtherance of their duties, shall be able to obtain an independent professional advice at the Company’s expense through an agreed procedure laid down formally.
10. Access to Information and Advice
The Board has access to information within the Group and the advice and services of the Company Secretary. The Directors may obtain independent professional advice to enhance their duties whenever necessary at the Company’s expense, subject to approval by the Chairman or the Board and depending on the quantum of the fees involved.
Board members are provided with all meeting materials including updates on operational, financial and corporate issues as well as minutes of meetings of the various Board Committees at least seven (7) days prior to the meetings to enable Directors to obtain further explanations/clarifications, if necessary, in order to ensure the effectiveness of the proceeding of the meetings. 21 ANNUAL REPORT 2020
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)
II. BOARD COMPOSITION
1. Composition and Diversity
During the financial year, the Board consists of eight (8) members comprising an Executive Chairman, four (4) Executive Directors and three (3) Independent Non-Executive Directors. This composition fulfills the requirements as set out in Paragraph 15.02(1) of the MMLR of Bursa Securities, which requires that at least two or one-third of the Board members, whichever is the higher, comprises Independent Non-Executive Directors.
The Board has every intention of meeting the Corporate Governance Blueprint 2011 on increasing women’s participation to reach 30%. A Diversity Policy was adopted by the Board on 21 January 2015. The Board however believes that it is more important to have the right mix and skills at the Board instead of merely looking at percentages in order to carry out its duties effectively. At present, there is one (1) female Independent Director on Board.
The Directors, with their diverse backgrounds and specialisation, collectively bring with them a wide range of experience and expertise in relevant fields which are vital for the strategic success of the Group. The profile of each Director is presented on page 7 to page 9 of this Annual Report. The summary of Board composition as at 14 January 2021 is set out below:-
Board Composition Age
Executive Director 63% 50 - 59 75% Independent Non-Executive Director 37% 60 & Above 25%
The strength of the Board lies in the composition of its members, who have a wide range of expertise, extensive experience and diverse background in engineering, business, finance and technical knowledge.
The Board acknowledges that the current composition of the Board does not meet the recommendation of Practice 4.1 of the MCCG 2017, which requires at least half of the Board comprises Independent Directors. However, the NC is of the view that the current Board size and composition is appropriate and effective, taking into account the nature and scope of the Company’s operations. The Board opines that there is sufficient balance of independent and non- independent directors on the Board such that decisions made are fully discussed and examined, taking into account the interests of all stakeholders. The Board has been able to discharge its duties professionally and effectively, and uphold good governance in its conduct. The Board will constantly review the recommendations and work towards adoption of corporate governance best practices. The Board is also satisfied that the current Board composition fairly reflects the interests of the minority shareholders in the Company and provides the appropriate balance and size to govern the Company effectively. Nevertheless, the Board will consider increasing the number of Independent Directors should there be a suitable candidate. 22 NOTION VTEC BERHAD
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)
II. BOARD COMPOSITION (CONT’D)
2. Non-Independent Chairman
Our Executive Chairman, although not an independent member of the Board, provides strong leadership and objective judgement with regard to ensuring the adequacy and effectiveness of the Board’s governance process. He is a founding member of the Group and has vast knowledge and experience in the industry that we are operating in. He has also been actively engaging with the investing community since the listing of our Company. Our Board is of the view that the separation of the positions of the Chairman and the Managing Director together with the independent directors, provide further assurance that there is a balance of power and authority on the Board, and effective stewardship of the Company in terms of strategies and business performance.
3. Nomination Committee (“NC”)
The role of the NC is to assist the Board in ensuring that the Board comprises individuals with the requisite skills, knowledge, professional expertise and character.
The NC comprises exclusively Non-Executive Directors who are independent. Currently, the members are as follows:-
Ms Anita Chew Cheng Im (Chairperson) Mr Saw Tat Loon (Member) Dato’ Abu Bakar Bin Mohd Nor (Member)
The Board does not consider it necessary to appoint a Senior Independent Director as all current members of the Board are always available and issues are discussed openly in Board meetings.
During the financial year ended 30 September 2020, the NC undertook the following activities in the discharge of its duties:
• Reviewed and assessed the performance and effectiveness of the Board as a whole and Board committees;
• Reviewed the terms of office and performance of the ARMC and each of its members to determine such ARMC and members have carried out their duties in accordance with their terms of reference;
• Reviewed the independence of Independent Directors;
• Reviewed and recommended to the Board to put forth the proposal for the re-election of directors at the forthcoming AGM;
• Reviewed and recommended the continuation in office as an Independent Non-Executive Director for Mr Saw Tat Loon and Ms Anita Chew Cheng Im who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years;
• Reviewed and discussed the succession planning of the Board and Senior Management in order to ensure that there are appropriate plans in place to fill vacancies and to meet the Group’s future needs; and
• Reviewed and assessed Directors’ training needs. 23 ANNUAL REPORT 2020
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)
II. BOARD COMPOSITION (CONT’D)
4. Appointment to the Board and Re-election of Directors
The Board delegates to the NC the responsibility of recommending the appointment of any new Director. The NC is responsible to ensure that the procedure for appointing new Directors is transparent and that appointments are made on merit. In evaluating the suitability of candidates for the Board, the NC shall ensure that the candidates possess the necessary background, skills, professional expertise and character.
The Company’s Constitution provides that at least one-third of the Directors be subject to retirement by rotation at each AGM, and that all Directors retire once every three years and be eligible to offer themselves for re-election. The Constitution also provides that a Director who is appointed during the year be subject to re-election at the next AGM following his appointment.
At the forthcoming AGM, three Directors namely Mr Choo Wing Onn, Mr Saw Tat Loon and Ms Anita Chew Cheng Im will be retiring by rotation pursuant to Clause 95 of the Company’s Constitution and being eligible, offered themselves for re-election.
5. Annual Evaluation
The assessment criteria of the Board and Board committees include an evaluation of the size and composition of the Board and Board committees, access to information, accountability, processes, Board’s and Board committees’ performance in relation to discharging its principal responsibilities, communication with Management and standards of conduct by the directors and committee members.
The evaluation process is led by the NC Chairman and supported by the Company Secretary via questionnaire on a yearly basis. The NC reviews the outcome of the evaluation and recommends to the Board on areas for continuous improvement and also for them to form the basis of recommending relevant directors for re-election at the AGM.
The NC assessed the effectiveness of the Board, its Committees and the contribution of each Director by identifying the strengths and weaknesses of the Board on 2 December 2020.
6. Annual Assessment of Independence
The Board recognises the importance of independence and objectivity in its decision-making process. The presence of the Independent Non-Executive Directors is essential in providing unbiased and impartial opinions, advice and judgement to ensure the interests of the Group, shareholders, employees, customers and other communities where the Group conducts its businesses are well represented and taken into account.
On 2 December 2020, the Board through the NC, has assessed the independence of its Independent Non-Executive Directors based on the criteria set out in the MMLR for the financial year ended 30 September 2020.
The current Independent Directors of the Company have fulfilled the criteria for “independence” as prescribed under Paragraph 1.01 and Practice Note 13 of the MMLR. The Company has also fulfilled the requirement of at least one-third of its Board members being Independent Non-Executive Directors. 24 NOTION VTEC BERHAD
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)
II. BOARD COMPOSITION (CONT’D)
7. Tenure of Independent Directors
The Board does not have term limits for its Independent Directors and is of the view that the independence of the Independent Directors should not be determined solely or arbitrarily by their tenure of service. The Board believes that the Independent Directors’ continued contribution, especially their invaluable knowledge of the Group and its operations gained through the years, will provide stability and benefits to the Board and the Company as a whole. The calibre, qualification, experience and personal qualities, and more importantly, the Director’s integrity and objectivity in discharging his/ her responsibilities in the best interest of the Company, predominantly determines the ability of the Director to serve effectively as an Independent Director.
The Board is also confident that the Independent Directors themselves, after having provided all the relevant confirmation on their independence, will be able to determine if they can continue to bring independent and objective judgement on Board deliberations and decision making.
Mr Saw Tat Loon and Ms Anita Chew Cheng Im have served the Company as independent directors for a cumulative term of sixteen (16) years and thirteen (13) years respectively. The Board has retained them as Independent Directors, notwithstanding their service tenure of more than 9 years.
The Board will seek the approval of the shareholders of the Company at the forthcoming AGM through a single- tier voting process to support the Board’s decision to retain them as Independent Directors based on the following justifications:-
(a) they have fulfilled the criteria under the definition of Independent Director as stated in the MMLR, and therefore would be able to bring independent and objective judgment to the Board;
(b) their experience in accounting and corporate finance enables them to provide the Board with a diverse set of experience, expertise, skills and competence;
(c) they have been with the Company long and therefore understand the Company’s business operations which enable them to participate actively and contribute during deliberations or discussions at ARMC and Board meetings;
(d) they have contributed sufficient time and efforts and attended all the NC, RC, ARMC and Board meetings for informed and balanced decision making; and
(e) they have exercised due care during their tenure as Independent Non-Executive Directors of the Company and carried out their professional duties in the interest of the Company and shareholders. 25 ANNUAL REPORT 2020
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)
III. REMUNERATION
The RC currently comprises the following members:
Dato’ Abu Bakar bin Mohd Nor (Chairman) Mr Saw Tat Loon (Member) Ms Anita Chew Cheng Im (Member)
The primary functions of the RC are setting up the policy framework and recommending remuneration packages and other terms of employment of the executive directors to the Board. The remuneration of Executive Directors who incidentally are also our top 5 key management is determined at levels which enable the Company to attract and retain Directors with the relevant experience and expertise to effectively manage the business of the Group. The Executive Directors’ remuneration are structured to link rewards to corporate and individual performance. In the case of Non- Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken. The RC shall also abide to the Directors’ Remuneration Policy in recommending the remuneration packages of the Directors.
The remuneration for the Independent Non-Executive Directors is decided by the Board as a whole, with the Director concerned abstaining from deliberations and voting on the decision of his/her individual remuneration package. The Board recommends the Directors’ fees and benefits payable to Independent Non-Executive Directors on a yearly basis to the shareholders for approval at the AGM.
Details of the Director Remuneration for the financial year ended 30 September 2020 are as follows:
Defined Other Contribution Share Based Salary Fee Emolument Plan Payment Name (RM) (RM) (RM) (RM) (RM) Mr Thoo Chow Fah 800,000 - 169,793 106,600 338,970 Mr Choo Wing Hong 1,080,000 - 160,418 143,000 508,455 Mr Choo Wing Onn 800,000 - 138,923 106,600 338,970 Mr Lee Tian Yoke 800,000 - 138,923 106,600 338,970 Mr Choo Wing Yew 800,000 - 138,923 106,600 338,970 Mr Saw Tat Loon - 92,400 11,000 - 127,114 Ms Anita Chew Cheng Im - 92,400 11,500 - 127,114 Dato’ Abu Bakar Bin Mohd Nor - 92,400 11,500 - 211,856
Total 4,280,000 277,200 780,980 569,400 2,330,419
For the financial year under review, the Directors of the Company did not receive any remuneration from the subsidiaries. 26 NOTION VTEC BERHAD
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPAL B: EFFECTIVE AUDIT AND RISK MANAGEMENT
1. ARMC
The ARMC comprises three (3) Independent Non-Executive Directors and all of them are financial literate and have sufficient understanding of the Group’s business. The Chairman of the ARMC is not the Chairman of the Board ensuring that the impairment and objectivity of the Board’s review of the ARMC findings and recommendations remain intact. The ARMC assesses the performance (including independence) and recommends to the Board annually the appointment or re-appointment of the external auditors guided by the factors as prescribed under Paragraph 15.21 of the MMLR.
The ARMC’s Term of Reference sets out its rights, duties, responsibilities and criteria on the composition of ARMC which includes a former key audit partner of the Group to observe cooling-off period of at least 2 years before being able to be appointed as member of ARMC.
The NC reviews the composition of the ARMC annually and recommends to the Board for approval ensuring that only Non-Executive Directors, majority of whom shall be Independent Directors, who are financially literate and are able to understand matters under the purview of the ARMC including financial reporting process are considered for membership on ARMC. All members of the ARMC undertake continuous professional development to keep themselves abreast of relevant developments in accounting and auditing standards, practices and rules.
The external auditors had met the ARMC without the presence of the executive Board members and management twice during the financial year (i.e. 15 January 2020 and 24 August 2020 respectively) on matters relating to the Group and its audit activities. During such meetings, the external auditors highlighted and discussed the nature and scope of the audit, audit programme, internal controls and any other issues that may require the attention of the AC or the Board.
The Company has also adopted the External Auditors Assessment Policy which outlined the guidelines and procedures for the ARMC to review, assess and monitor performance, suitability and independence of the external auditors. The ARMC ensures the external audit function is independent of the activities it audits and reviews the contracts for the provision of non-audit services by the external auditors in order to ensure that does not give rise to a conflict of interest situation.
For the financial year ended 30 September 2020, fees paid/payable to the external auditors, Crowe Malaysia PLT and its affiliated firms by the Company and the Group are stated in the table below:-
Company Group Nature of Services (RM) (RM) Audit 63,000 277,000 Non-Audit 53,500 137,309 Total 116,500 414,309
2. Risk Management and Internal Control Framework
The Board acknowledges the significance of a sound system of risk management and internal control to manage the overall risk exposure of the Group. The Company had in August 2020 adopted Group Risk Management Policies and Procedures which articulates the organisation’s risk management philosophy, the processes and practices that are in place to identify, communicate and manage material risk across the organisation.
The Group has engaged NGL Tricor Governance Sdn Bhd to review the key risks over the strategic operation, reporting and compliance aspects to ensure proper management and mitigation of weakness. 27 ANNUAL REPORT 2020
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPAL B: EFFECTIVE AUDIT AND RISK MANAGEMENT (CONT’D)
2. Risk Management and Internal Control Framework (Cont’d)
NGL Tricor Governance Sdn Bhd was also appointed to carry out internal audit function and reports directly to the ARMC. The resources and scope of work covered by the internal audit function during the financial year under review, including its observation and recommendations, is provided in the Audit & Risk Management Committee Report of this Annual Report. NGL Tricor Governance Sdn Bhd assigned five (5) staffs to provide internal audit services for our Group for the financial year ended 30 September 2020. Details on the person responsible for the internal audit are set out below:-
Name : Chang Ming Chew Qualification : Mr Chang’s qualification and membership with professional associations are as follows: i) Certified Internal Auditor of the Institute of Internal Auditors; ii) Professional member of the Institute of Internal Auditors Malaysia; iii) Member of the Association of Chartered Certified Accountants (UK); and iv) Member of Malaysian Institute of Accountants Independence : Does not have any family relationship with any director and/or major shareholder of the Company Public Sanction : Has no convictions for any offences within the past 5 years and has not been imposed any or penalty public sanction or penalty by the relevant regulatory bodies during the financial year
Details of the internal audit function together with the scope of the Group’s internal control functions are set out in the Statement on Risk Management and Internal Control and ARMC Report of this Annual Report.
The Board affirms its overall responsibility with established and clear functional responsibilities and accountabilities which are carried out and monitored by the ARMC. The adequacy and effectiveness of the internal controls and risk management framework were reviewed by the ARMC.
Further information may be found in the Statement of Risk Management and Internal Control.
PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS
1. Communication with Stakeholders
The Company has established a corporate disclosure policy, which is made available on the corporate website, to ensure accurate, clear, timely and high quality disclosure of material information. To augment the process of disclosure, the Board has a section on the Company’s website that provides the salient features of the Board Charter, Term of Reference of each committee and the Company’s Annual Report.
2. Conduct of general meeting
The AGM is the principal forum for dialogue and interaction with shareholders. At the AGM, the Board provides opportunities for shareholders to raise questions pertaining to the business activities of the Group. The Executive Chairman, Managing Director, and Chairman of each Board Committee and when necessary, the external auditors, are available to provide explanations on queries raised by shareholders and proxies during the general meetings. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf. The Notice of AGM was circulated more than 28 days before the date of the meeting to enable shareholders to make the necessary arrangements to attend the AGM and go through the Annual Report and papers supporting the resolutions proposed. Such practice is in line with Practice 12.1 of the MCCG 2017. 28 NOTION VTEC BERHAD
CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)
PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS (CONT’D)
3. Poll Voting
The Company has implemented poll voting for all the resolutions set out in the Notice of AGM and EGM to be voted via electronic means to expedite verification and counting of votes. In addition, the Company appointed scrutineer to validate the votes cast at the general meetings.
4. Communication and Engagement with Shareholders and Prospective Investors
The Group recognises the need to inform the shareholders of all significant developments concerning the Group on a timely basis, with strict adherence to the MMLR. Shareholders and prospective investors are kept informed of all major developments within the Group by way of announcements via the Bursa Link, the Company’s Annual Reports, website and other circulars to shareholders with an overview of the Group’s financial and operational performance.
FOCUS AREA ON CORPORATE GOVERNANCE
Corporate governance was clearly imperative for the Group in the year 2017 against the backdrop of regulatory changes in the domestic corporate governance realm and a relatively challenging economic environment that is characterised by volatile market conditions and commodity prices. Against the aforementioned setting, during the year under review, the Board directed its focus on the core duties of the Board which is grounded on the creation of long-term value for stakeholders.
The Board will continue to enhance the corporate disclosure requirements in the best interest of the Company’s shareholders and stakeholders in the upcoming years. The areas to be prioritised by the Board will be those principles which have not been adopted by the Company as disclosed in the CG Report.
This Statement together with the CG Report was approved by the Board on 14 January 2021. 29 ANNUAL REPORT 2020
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
The Board of Directors (“Board”) is pleased to present the report of the Audit and Risk Management Committee (“ARMC“) for the financial year ended 30 September 2020.
MEMBERSHIP
The members of ARMC are Non-Executive Directors with all of them being Independent Directors, namely:
Saw Tat Loon (Chairman/ Independent Non-Executive Director) Dato’ Abu Bakar Bin Mohd Nor (Member/ Independent Non-Executive Director) Anita Chew Cheng Im (Member/ Independent Non-Executive Director)
Saw Tat Loon, who is the Chairman of the ARMC, is a fellow member of the Association of Chartered Certified Accountants and a member of the Malaysian Institute of Accountants (“MIA”) whilst Dato’ Abu Bakar Bin Mohd Nor is a Chartered Accountant, Institute of Chartered Accountant, England and Wales. Ms Anita Chew Cheng Im holds a Bachelor of Economics Degree, majoring in Accounting. This statement is made in compliance with Paragraph 15.09 (1)(c)(i) of the Main Market Listing Requirement (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).
MEETINGS OF THE ARMC
The ARMC met 5 times during the financial year ended 30 September 2020. The details of their attendance at meetings are as follows:
Audit Committee Number of Meetings Attended Saw Tat Loon (Chairman) 5/5 Anita Chew Cheng lm 5/5 Dato’ Abu Bakar Bin Mohd Nor 5/5
The Terms of Reference of the ARMC is made available on the corporate website at www.notionvtec.com.
SUMMARY OF WORK OF THE ARMC
In discharging its functions and duties in accordance with its Terms of Reference, the ARMC had carried out the following work during the financial year ended 30 September 2020:
1. At their meetings held on 15 January 2020 and 24 August 2020, the ARMC met with the external auditors in the absence of the Executive Board Members and Management to discuss on any significant audit issues which may have arisen in the course of their audit of the Group.
2. The ARMC had ensured that the quarterly financial results of the Group complied with the Malaysian Financial Reporting Standard (“MFRS”) and Appendix 9B of the MMLR. The quarterly financial results for the fourth quarter ended 30 September 2019, first quarter ended 31 December 2019, second quarter ended 31 March 2020 and third quarter ended 30 June 2020 were reviewed by the ARMC at their meetings held on 26 November 2019, 26 February 2020, 3 June 2020 and 24 August 2020.
3. The ARMC had reviewed the Anti-Bribery and Corruption Policy subsequent to the implementation of Malaysian Anti- Corruption Commission (Amendment) Act 2018 and recommended to the Board for adoption. 30 NOTION VTEC BERHAD
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONT’D)
SUMMARY OF WORK OF THE ARMC (CONT’D)
4. The ARMC received and discussed the Internal Audit Reports containing the audit findings and recommendations made by the internal auditors on weaknesses in the systems of internal control and the Management responses on those issues. The ARMC monitored the progress on the corrective actions taken by the Management on a quarterly basis until it is satisfied that the weaknesses identified had been adequately addressed.
5. At their meeting held on 24 August 2020, the ARMC met with the internal auditors in the absence of the Executive Board Members and Management to discuss on any significant audit issues which may have arisen in the course of their audit of the Group.
6. The Related Party Transactions (“RPTs”), if any of the Group was reviewed by the ARMC at every quarterly meeting. The ARMC was satisfied that all RPTs were within arm’s length, fair, reasonable and on normal commercial terms and not detrimental to the interest of the minority shareholders.
7. At their meetings held on 26 November 2019, the ARMC reviewed and discussed the following, amongst others:-
a. The Audit Review Memorandum by the External Auditors on the significant audit findings in respect of their audit of the Group for the financial year ended 30 September 2019. b. The assessment of the performance and independence of the External Auditors for the financial year ended 30 September 2019. c. The Internal Audit Reports. d. Internal Audit Planning Memorandum for year 2020. e. The assessment of the adequacy of the scope, functions, competency and resources of the internal audit function. f. Update on the Enterprise Risk Management Report. g. The quarterly financial results of the Group for the period ended 30 September 2019. h. Related Party Transactions.
8. At their meeting held on 15 January 2020, the ARMC reviewed and discussed the following:-
a. The Audited Financial Statements for the financial year ended 30 September 2019. b. The Audit Review Memorandum for the financial year ended 30 September 2019 by the External Auditors. c. Reports for inclusion in the 2019 Annual Report, i.e. Audit and Risk Management Committee Report, Statement on Risk Management and Internal Control, Corporate Governance Overview Statement and Corporate Governance Report. d. Audit Fee and non audit services and fees for the financial year ended 30 September 2019. e. Re-appointment of Messrs Crowe Malaysia PLT as External Auditors for the financial year ended 30 September 2020 and recommended to the Board of Directors to obtain the shareholders’ approval. f. Met with External Auditors without presence of the Executive Board members and management of the Company.
9. At their meeting held on 26 February 2020, the ARMC reviewed and discussed the following:-
a. The quarterly financial results of the Group for the period ended 31 December 2019. b. Related Party Transactions. c. The Internal Audit Reports. d. Internal Audit Planning Memorandum for 2020. 31 ANNUAL REPORT 2020
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONT’D)
SUMMARY OF WORK OF THE ARMC (CONT’D)
10. At their meeting held on 3 June 2020, the ARMC reviewed and discussed the following:-
a. The quarterly financial results of the Group for the period ended 31 March 2020. b. Related Party Transactions. c. The Anti-Bribery and Corruption Policy subsequent to the introduction of Malaysian Anti-Corruption (Amendment) Act 2018 and Whistleblowing Policy and Procedure.
11. At their meeting held on 24 August 2020, the ARMC reviewed and discussed the following:-
a. The Internal Audit Reports. b. Enterprise Risk Management Report. c. The quarterly financial results of the Group for the period ended 30 June 2020. d. Audit Plan by the External Auditors for the financial year ended 30 September 2020. e. Met with Internal Auditors without presence of the Executive Board members and management of the Company. f. Met with External Auditors without presence of the Executive Board members and management of the Company. g. Related Party Transactions. h. Internal Audit Planning Memorandum for year 2020. i. The Group Risk Management Policies and Procedures.
INTERNAL AUDIT FUNCTION
The Group’s internal audit function is carried out by an independent external firm of professional Internal Auditors, NGL Tricor Governance Sdn Bhd – headed by its Director, Mr Chang Ming Chew, who is a certified internal auditor and a professional member of the Institute of Internal Auditors Malaysia (IA), which reports directly to the ARMC on its activities based on the approved annual Internal Audit Plan. The approved annual Internal Audit Plan is designed to cover entities across all level of operations within the Group.
The principal role of IA is to provide the ARMC with reports on the state of internal controls of the operating entities within the Group and the extent of compliance of such entities within the Group’s established policies and procedures.
During the financial year under review, IA conducted series of audit assignments on entities in all operating segments of the Group. The Internal Audit assignments are designed to review and assess the procedures, systems and controls whether they are adequate and effective to meet the requirement of:
• Compliance with applicable laws and regulations and Standard Operation Procedures (SOP); • Reliability and integrity of information; • Safeguarding of assets financial; and • Operational efficiency and effectiveness.
The main audit assignments were:
• Review of Indirect Cost Management • Review of Safety, Health and Environment Management • Review on Product Development Process (Automotive) • Review of Responsible Business Alliance Code of Conduct
Further details of the activities of internal audit function are set out in the Statement on Risk Management and Internal Control.
The cost incurred for the internal audit function of the Group for the financial year ended 30 September 2020 was RM64,000. 32 NOTION VTEC BERHAD
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
INTRODUCTION
The Board is committed to maintain a sound system of risk management and internal control within the Group in order to safeguard shareholders’ investments and the Group’s assets. Pursuant to Paragraph 15.26(b) of the MMLR, the Board is pleased to provide this statement on risk management and internal control which is prepared in accordance with the guidelines set out in the Institute of Internal Auditors Malaysia’s Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers.
RESPONSIBILITY OF THE BOARD
The Board affirms its overall responsibility for maintaining a sound system of risk management and internal control and for reviewing their adequacy and integrity so as to safeguard all its stakeholders’ interests and protecting the Group’s assets. These systems cover inter-alia, financial, operational and compliance systems controls and risk management. However, in view of the limitations that are inherent in any system of risk management and internal control, the system is designed to manage rather than to totally eliminate the risk of failure to achieve the Group’s business activities.
Accordingly, the system of risk management and internal controls can only provide reasonable but not absolute assurance against material misstatement of losses and fraud.
The Board is pleased to disclose that there is an on-going systematic process in place for identifying, evaluating and managing the various diverse risks faced by the Group throughout the financial year under review. This process includes enhancing and regularly reviewing the system of risk management and internal control as and when there are changes to the business environment or regulatory guidelines.
The Board has received assurance from the Managing Director and Executive Director in charge of Finance that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects.
RISK MANAGEMENT FRAMEWORK
The Board acknowledges that the management of principal risks plays an important and integral part in achieving the Group’s corporate objectives. The Group has an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. This is to ensure that all potential risks are adequately addressed at various levels within the Group including but not limited to the effects of natural disasters, rioting by workers, fire, acts of sabotage and other debilitating incidents.
The Board believes that the sound system of risk management and internal control is built on a clear understanding and appreciation of the Group’s risk management framework with the following key elements:
• risk management is embedded in the Group’s management and operational framework and the employees are exposed and subjected to training on the Group’s policies and procedures;
• risk management processes applied should aim to take advantage of opportunities, manage uncertainties and minimize threats; and
• regular reporting and monitoring activities emphasise accountability and responsibility for managing risks.
The Board appointed NGL Tricor Governance Sdn Bhd, an independent firm to assist the management in improving the current Risk Management Framework. 33 ANNUAL REPORT 2020
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT’D)
THE SYSTEM OF RISK MANAGEMENT AND INTERNAL CONTROL
The system of Group’s risk management and internal control which is in placed during the financial year, encompasses, inter- alia, the following:
• ISO 9001:2008 Quality Management Systems has been implemented for the Company’s main subsidiary, Notion Venture Sdn Bhd where documented internal procedures and standard operating procedures have been put in place. Internal quality audits are carried out by management and annual surveillance audits are conducted by an independent certification body to provide a high assurance of compliance;
• A strategic planning and an annual budgeting process has been established and monitored on a regular basis;
• An organisational structure with defined responsibilities and delegation of authorities for committees of the Board and the management committee;
• Companies policies and procedures, which set out guidelines and the expected standards for the Group’s operations are under regular review and update so as to maintain its effectiveness at all times;
• Operational review meetings are held and attended by the executive directors and the department heads to access the performance of the Group’s operations; and
• Regular production meetings which involved the senior production management and related units to promptly address any production problems faced.
INTERNAL AUDIT FUNCTION
The internal audit function has the primary objective of carrying out reviews of the internal control systems to determine if the internal control procedures have been complied with as well as to make recommendations to strengthen the system so as to foster a strong management control environment.
The Board is fully aware of the importance of the internal audit function and has engaged an independent professional firm (IA Firm) to provide independent assurance the Board requires on the effectiveness and efficiency of the group’s system of risk management and internal control.
The IA Firm adopts a risk based approach and prepares its audit strategy and plan based on the risk profiles from the risk assessment of the business units of the Group. Scheduled internal audits are carried out based on the annual audit plan approved by the ARMC. On a quarterly basis the IA Firm presents the ARMC with the internal audit reports which summarise the audit approach, scope, key risks, significant audit findings, the overall opinion for the internal control review, management comments on the audit findings and recommendations.
During the year under review, there were some weaknesses detected in certain divisions. The management has subsequently addressed some of the issues and the others are being attended to for which a follow up of the findings will be conducted. Deadlines have been provided to ensure all issues will be addressed effectively.
The cost of internal audit function for the financial year ended 30 September 2020 was RM64,000. 34 NOTION VTEC BERHAD
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT’D)
REVIEW OF THIS STATEMENT BY EXTERNAL AUDITORS
The external auditors have reviewed this statement on risk management and internal control for inclusion in the Annual Report of the Company for the financial year ended 30 September 2020 and reported to the Board that nothing has come to their attention that causes them to believe that the Statement on Risk Management and Internal Control intended to be included in the Annual Report is not prepared, in all material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, nor is the Statement factually inaccurate.
STATE OF RISK MANAGEMENT AND INTERNAL CONTROL
The existing system of risk management and internal control has operated adequately for the year ended 30 September 2020 and up to the date of issuance of the financial statements. Although there were certain weaknesses detected during the process of the internal audit function, the management is committed to rectify these weaknesses and follow up reviews will be constantly performed. The Board is committed towards operating a sound system and will strive for continuous improvement where necessary, to further enhance the said system.
The Board is satisfied with the adequacy, effectiveness and integrity of the Group’s system of risk management and internal control system. 35 ANNUAL REPORT 2020
FINANCIAL STATEMENTS
36 49 DIRECTORS’ REPORT STATEMENTS OF COMPREHENSIVE INCOME 42 50 STATEMENT BY DIRECTORS STATEMENTS OF CHANGES IN EQUITY 42 53 STATUTORY DECLARATION STATEMENTS OF CASH FLOWS 43 55 INDEPENDENT AUDITORS’ REPORT NOTES TO THE FINANCIAL STATEMENTS 47 STATEMENTS OF FINANCIAL POSITION 36 NOTION VTEC BERHAD
DIRECTORS’ REPORT
The directors hereby submit their report and the audited financial statements of the Group and the Company for the financial year ended 30 September 2020. All values shown in this report are rounded to the nearest thousand (“RM’000”) except where otherwise indicated.
PRINCIPAL ACTIVITIES
The principal activities of the Company are those of investment holding and providing management services to its subsidiaries. The principal activities and other details of the subsidiaries are disclosed in Note 7 to the financial statements.
RESULTS
Group Company RM’000 RM’000
Profit for the financial year 6,323 817
DIVIDENDS
On 15 January 2020, the Company paid an interim single tier tax-exempt dividend of 1 sen per ordinary share amounting to RM3,357,284 in respect of the financial year ended 30 September 2019.
No dividend was recommended by the directors for the financial year.
RESERVES AND PROVISIONS
All material transfers to or from reserves or provisions during the financial year have been disclosed in the financial statements.
ISSUE OF SHARES AND DEBENTURES
During the financial year, the Company increased its issued and paid-up share capital from RM200,022,504 to RM208,850,108 by way of:-
(i) issuance of 11,580,798 new ordinary shares pursuant to the Employees’ Share Option Scheme (“ESOS”) as follows;
Number of Exercise Price Cash Consideration Shares RM RM 182,600 0.80 * 146,080 661,370 0.53 ** 350,526 3,288,800 0.44 * 1,447,072 2,312,928 0.29 ** 670,749 5,135,100 0.68 3,491,868 11,580,798 6,106,295
* Before bonus issue. ** After bonus issue. 37 ANNUAL REPORT 2020
DIRECTORS’ REPORT (CONT’D)
ISSUE OF SHARES AND DEBENTURES (CONT’D)
(ii) issuance of 3,999 new ordinary shares from the exercise of Warrants 2018/2023 (“Warrants-C”) as follows; and
Number of Exercise Price Cash Consideration Shares RM RM 3,535 0.84 * 2,969 464 0.56 ** 260 3,999 3,229
* Before bonus issue. ** After bonus issue.
(iii) the issuance of 168,325,033 ordinary shares through a bonus issue on the basis of one new ordinary share for every two existing ordinary share held in the Company, by way of nil consideration.
The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company.
The Company did not issue any debentures during the financial year.
SHARE OPTIONS
The shareholders of the Company, by a resolution passed at the Extraordinary General Meeting held on 23 February 2017, approved the Long Term Incentive Plan comprising ESOS and Executive Share Grant Scheme. The ESOS became effective on 24 February 2017.
The principal features of the ESOS and the movements in the number of options during the financial year are disclosed in Note 11 to the financial statements.
WARRANTS
On 14 March 2018, the Company issued 33,063,385 free Warrants-C on the basis of 1 warrant for every 10 existing ordinary shares held by shareholders of the Company.
The salient features of Warrants-C are as follows:
(i) The warrants may be exercised at any time after the date of issue of the warrants until the expiry date which is the date occurring on the Fifth (5th) anniversary of the issue of the warrants.
(ii) Subject to adjustments, in accordance with the Deed Poll, during the exercise period each warrant entitles its registered holder to subscribe for one (1) new ordinary share at an exercise price of RM0.84 at any time from the date of issue up to the expiry date.
Pursuant to the Bonus Issue and Free Warrants Issue, an additional 16,529,337 Warrants-C (“Additional Warrants-C”) were issued, whereby a holder of 2 existing Warrants-C received 1 new Warrants-C, and the exercise price of the Warrants-C was revised from RM0.84 to RM0.56 per Warrants-C with effect from 18 May 2020.
During the financial year, 3,999 Warrants-C were converted to 3,999 ordinary shares. The number of outstanding Warrants-C as at 30 September 2020 was 49,588,723. 38 NOTION VTEC BERHAD
DIRECTORS’ REPORT (CONT’D)
BAD AND DOUBTFUL DEBTS
Before the financial statements were prepared, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for impairment losses on receivables.
At the date of this report, the directors are not aware of any circumstances which would render the amount written off for bad debts or the amount of allowance for impairment losses on receivables inadequate to any substantial extent.
CURRENT ASSETS
Before the financial statements were prepared, the directors took reasonable steps to ensure that any current assets which were unlikely to be realised in the ordinary course of business including the values of current assets as shown in the accounting records have been written down to an amount which the current assets might be expected so to realise.
At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:
(i) any charge on the assets of the Group or the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or
(ii) any contingent liability which has arisen since the end of the financial year.
No contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and the Company to meet their obligations when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. 39 ANNUAL REPORT 2020
DIRECTORS’ REPORT (CONT’D)
ITEMS OF AN UNUSUAL NATURE
The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature.
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group or the Company for the financial year in which this report is made.
DIRECTORS
The directors who served since the beginning of the financial year and up to the date of this report are as follows:-
• Thoo Chow Fah • Choo Wing Hong • Choo Wing Onn • Choo Wing Yew • Lee Tian Yoke • Saw Tat Loon • Anita Chew Cheng Im • Dato’ Abu Bakar Bin Mohd Nor
The directors of the Company’s subsidiaries who served since the beginning of the financial year and up to the date of this report are similar to those disclosed above.
DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings, the interests in shares in the Company of the directors in office at the end of the financial year are as follows:-
Number of Ordinary Shares Balance at Bonus Balance at Name of Director 1.10.2019 Bought Issue Sold 30.9.2020 Thoo Chow Fah - Direct 12,082,534 1,165,000 6,623,767 - 19,871,301 - Indirect * 855,308 200,000 527,654 - 1,582,962 Choo Wing Hong - Direct 33,288,626 1,100,000 17,194,313 - 51,582,939 Choo Wing Onn - Direct 26,547,844 1,800,000 14,173,922 - 42,521,766 Choo Wing Yew - Direct 6,099,925 3,000,000 4,549,962 - 13,649,887 Lee Tian Yoke - Direct 12,917,631 3,300,000 6,958,815 (4,200,000) 18,976,446 Dato’ Abu Bakar Bin Mohd Nor - Direct 27,793 - 13,896 - 41,689 Saw Tat Loon - Direct - 450,000 - - 450,000 Anita Chew Cheng Im - Direct - 450,000 - - 450,000
* Deemed interested through spouse’s shareholding in the Company. 40 NOTION VTEC BERHAD
DIRECTORS’ REPORT (CONT’D)
DIRECTORS’ INTERESTS (CONT’D)
Number of Share Options Balance at Balance at Name of Director 1.10.2019 Granted Bonus Issue Exercised 30.9.2020 Thoo Chow Fah 600,000 1,200,000 300,000 - 2,100,000 Choo Wing Hong 1,200,000 1,800,000 600,000 - 3,600,000 Choo Wing Onn 800,000 1,200,000 100,000 (600,000) 1,500,000 Choo Wing Yew 800,000 1,200,000 400,000 - 2,400,000 Lee Tian Yoke 600,000 1,200,000 300,000 (2,100,000) - Saw Tat Loon 300,000 450,000 150,000 (450,000) 450,000 Anita Chew Cheng Im 300,000 450,000 150,000 (450,000) 450,000 Dato’ Abu Bakar Bin Mohd Nor - 750,000 - - 750,000
Number of Warrants-C Balance at Balance at Name of Director 1.10.2019 Bought Bonus Issue Sold 30.9.2020 Thoo Chow Fah - Direct 1,208,253 - - (1,208,253) - - Indirect * 585,530 100,000 - (585,530) 100,000 Choo Wing Hong - Direct 3,183,032 150,000 529,750 (2,273,532) 1,589,250 Choo Wing Onn - Direct 2,654,784 - 450,000 (2,304,784) 800,000 Choo Wing Yew - Direct 609,992 - 107,736 (394,520) 323,208 Lee Tian Yoke - Direct 1,257,763 - - (1,257,763) - Dato’ Abu Bakar Bin Mohd Nor - Direct 2,779 - 1,389 - 4,168
* Deemed interested through spouse’s shareholding in the Company.
Save as disclosed above, none of the other directors in office at the end of the financial year held any interests in shares, share options and Warrants-C in the Company or its related corporation during the financial year. 41 ANNUAL REPORT 2020
DIRECTORS’ REPORT (CONT’D)
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than directors’ remuneration disclosed in Note 20 to the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except for any benefits which may be deemed to have arisen by virture of certain related party transactions as disclosed in Note 25 to the financial statements.
Neither during nor at the end of the financial year, was the Company a party to any arrangement, apart from the Company’s ESOS, whose object is to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
INDEMNITY AND INSURANCE FOR DIRECTORS AND OFFICERS
During the financial year, the total amounts of indemnity coverage and insurance premium paid for the directors and officers of the Company were RM5,000,000 and RM13,000 respectively.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
The significant events during the financial year are disclosed in Note 31 to the financial statements.
SIGNIFICANT EVENT AFTER THE REPORTING PERIOD
The significant event occurring after the reporting period is disclosed in Note 32 to the financial statements.
AUDITORS
The auditors, Crowe Malaysia PLT, have expressed their willingness to continue in office. The auditors’ remuneration are disclosed in Note 19 to the financial statements. There was no indemnity given to or liability insurance effected for the auditors during the financial year.
Signed In Accordance With A Resolution Of The Directors Dated 14 January 2021
Thoo Chow Fah Choo Wing Hong 42 NOTION VTEC BERHAD
STATEMENT BY DIRECTORS Pursuant To Section 251(2) Of The Companies Act 2016
We, Thoo Chow Fah and Choo Wing Hong, being two of the directors of Notion VTec Berhad, state that, in the opinion of the directors, the financial statements set out on pages 47 to 101 give a true and fair view of the financial position of the Group and the Company as at 30 September 2020 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
Signed In Accordance With A Resolution Of The Directors Dated 14 January 2021
Thoo Chow Fah Choo Wing Hong
STATUTORY DECLARATION Pursuant To Section 251(1)(b) Of The Companies Act 2016
I, Choo Wing Yew (MIA membership no.: 10180), being the director primarily responsible for the financial management of Notion VTec Berhad, do solemnly and sincerely declare that the financial statements set out on pages 47 to 101 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the declaration to be true, and by virtue of the Statutory Declarations Act 1960.
Subscribed and solemnly declared by the abovenamed Choo Wing Yew at Klang in the state of Selangor Darul Ehsan on this 14 January 2021 Choo Wing Yew Before me
Nadzrul Azali Bin Abdul Aziz No: B 548 Commissioner for Oaths 43 ANNUAL REPORT 2020
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF NOTION VTEC BERHAD (Incorporated in Malaysia) Registration No : 200301035125 (637546 - D)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of Notion VTec Berhad, which comprise the statements of financial position as at 30 September 2020 of the Group and the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 47 to 101.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and the Company as at 30 September 2020, and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
Basis for Opinion
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence and Other Ethical Responsibilities
We are independent of the Group and the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the Group and the Company for the current financial year. These matters were addressed in the context of our audit of the financial statements of the Group and the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter Valuation of inventories (Refer to Notes 3 and 8 to Our audit procedures included, among others: the financial statements) • Obtaining an understanding of: • the Group’s inventory management process; The Group carries significant inventories. • how the Group identifies and assesses inventories write-downs; and Management periodically reviews the inventories • how the Group ascertains the accounting estimates for inventories for potential write-downs by considering their aging write down. profile, estimation of market price fluctuations • Reviewing the ageing analysis of inventories and testing the reliability and net realisable value. These reviews involve thereof. judgements and estimation uncertainty in forming • Examining the perpetual records for inventories movements and to expectations about future assumptions, sales and identify slow moving items. demands. • Making inquiries of management regarding the action plans to clear slow moving and obsolete inventories. • Reviewing net realisable value of major inventories. • Evaluating the reasonableness and adequacy of inventories written down and written off. 44 NOTION VTEC BERHAD
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF NOTION VTEC BERHAD (CONT’D) (Incorporated in Malaysia) Registration No : 200301035125 (637546 - D)
Key Audit Matters (Cont’d)
Key audit matter How our audit addressed the key audit matter Impairment of property, plant and equipment (Refer Our audit procedures included, among others: to Notes 3 and 4 to the financial statements) • Evaluating whether the method used by the Group in measuring the recoverable amount is appropriate in the circumstances. The Group carries significant property, plant and • Making enquiries of and challenging management on the key equipment. The Group reviewed its property, plant assumptions and inputs used in the measurement method. and equipment for indications of impairment • Evaluating whether the key assumptions and inputs used are reasonable and where such indications exist, the Group and consistent by taking into consideration the past performance, future performed impairment test which involved significant growth, market development, etc. judgements and estimation uncertainty in making • Performing stress tests and sensitivity analysis to assess the impacts of key assumptions about future market and economic those key assumptions and inputs on the measurement of recoverable conditions, growth rates, profit margins, discount amount. rate, etc.
Information Other than the Financial Statements and Auditors’ Report Thereon
The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and the Company and our auditors’ report thereon.
Our opinion on the financial statements of the Group and the Company does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Statements
The directors of the Company are responsible for the preparation of financial statements of the Group and the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and the Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and the Company, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. 45 ANNUAL REPORT 2020
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF NOTION VTEC BERHAD (CONT’D) (Incorporated in Malaysia) Registration No : 200301035125 (637546 - D)
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements of the Group and the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements of the Group and the Company, including the disclosures, and whether the financial statements of the Group and the Company represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 46 NOTION VTEC BERHAD
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF NOTION VTEC BERHAD (CONT’D) (Incorporated in Malaysia) Registration No : 200301035125 (637546 - D)
Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and the Company for the current financial year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors, are disclosed in Note 7 to the financial statements.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Crowe Malaysia PLT Ong Beng Chooi 201906000005 (LLP0018817-LCA) & AF 1018 03155/05/2021 J Chartered Accountants Chartered Accountant
Shah Alam
28 January 2021 47 ANNUAL REPORT 2020
STATEMENTS OF FINANCIAL POSITION At 30 September 2020
Group Company 2020 2019 2020 2019 NOTE RM’000 RM’000 RM’000 RM’000
ASSETS NON-CURRENT ASSETS Property, plant and equipment 4 290,141 328,709 - - Right-of-use assets 5 47,675 - - - Intangible assets 6 5,931 4,609 - - Investments in subsidiaries 7 - - 83,779 80,340 343,747 333,318 83,779 80,340
CURRENT ASSETS Inventories 8 46,913 44,074 - - Receivables 9 79,675 71,776 123,497 99,207 Prepayments 2,687 617 - - Current tax assets 10,971 9,727 11 26 Cash and cash equivalents 10 82,712 68,834 32,677 51,682 222,958 195,028 156,185 150,915 TOTAL ASSETS 566,705 528,346 239,964 231,255
EQUITY AND LIABILITIES
EQUITY Share capital 11 208,850 200,023 208,850 200,023 Share option reserve 5,630 2,416 5,630 2,416 Currency translation reserve 8,372 13,403 - - Capital reserve 4,800 4,800 - - Revaluation reserve 1,960 952 - - Retained profits 197,662 194,411 22,468 25,008 TOTAL EQUITY 427,274 416,005 236,948 227,447
The annexed notes form an integral part of these financial statements. 48 NOTION VTEC BERHAD
STATEMENTS OF FINANCIAL POSITION (CONT’D) At 30 September 2020
Group Company 2020 2019 2020 2019 NOTE RM’000 RM’000 RM’000 RM’000
NON-CURRENT LIABILITIES Loans and borrowings 12 20,421 52,609 - - Lease liabilities 13 26,046 - - - Retirement benefits 14 627 537 - - Deferred tax liabilities 15 8,622 12,099 - - Deferred income on government grant 16 5,019 2,618 - - 60,735 67,863 - -
CURRENT LIABILITIES Loans and borrowings 12 6,800 13,345 - - Lease liabilities 13 11,000 - - - Payables 17 60,529 30,979 3,016 3,808 Current tax liabilities 367 154 - - 78,696 44,478 3,016 3,808 TOTAL LIABILITIES 139,431 112,341 3,016 3,808 TOTAL EQUITY AND LIABILITIES 566,705 528,346 239,964 231,255
The annexed notes form an integral part of these financial statements. 49 ANNUAL REPORT 2020
STATEMENTS OF COMPREHENSIVE INCOME For the financial year ended 30 September 2020
Group Company 2020 2019 2020 2019 NOTE RM’000 RM’000 RM’000 RM’000
Revenue 18 242,747 237,687 10,240 46,240
Cost of sales (215,971) (199,308) - - Gross profit 26,776 38,379 10,240 46,240
Other income 33,713 23,100 1,123 1,962 60,489 61,479 11,363 48,202
Marketing and distribution expenses (4,493) (4,716) - -
Administrative and other operating expenses (44,633) (37,834) (10,526) (7,178)
Finance costs (4,523) (4,839) (2) (4) Profit before tax 19 6,840 14,090 835 41,020
Tax expense 21 (517) (6,547) (18) (8) Profit for the financial year 6,323 7,543 817 41,012
Other comprehensive income:-
Item that will not be reclassified subsequently to profit or loss:- Fair value changes of intangible assets 1,409 952 - -
Item that will be reclassified subsequently to profit or loss:- Currency translation differences for foreign operation (5,031) 1,852 - -
Total other comprehensive (expense)/income for the financial year (3,622) 2,804 - -
Total comprehensive income for the financial year 2,701 10,347 817 41,012
Earnings per share: 22 - Basic (sen) 1.25 1.51 - Diluted (sen) 1.21 1.50
The annexed notes form an integral part of these financial statements. 50 NOTION VTEC BERHAD
STATEMENTS OF CHANGES IN EQUITY For the financial year ended 30 September 2020
Non-distributable Distributable Share Currency Share Option Translation Capital Revaluation Retained Total Capital Reserve Reserve Reserve Reserve Profits Equity Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Balance at 1 October 2018 199,791 2,492 11,551 4,800 - 190,199 408,833
Fair value changes of intangible assets - - - - 952 - 952 Currency translation differences for foreign operation - - 1,852 - - - 1,852
Total other comprehensive income for the financial year - - 1,852 - 952 - 2,804 Profit for the financial year - - - - - 7,543 7,543 Total comprehensive income for the financial year - - 1,852 - 952 7,543 10,347 Issuance of shares pursuant to ESOS 232 (76) - - - - 156 Dividends to owners of the Company (Note 23) - - - - - (3,331) (3,331) Total transactions with owners 232 (76) - - - (3,331) (3,175) Balance at 30 September 2019 200,023 2,416 13,403 4,800 952 194,411 416,005
The annexed notes form an integral part of these financial statements. 51 ANNUAL REPORT 2020
STATEMENTS OF CHANGES IN EQUITY (CONT’D) For the financial year ended 30 September 2020
Non-distributable Distributable Share Currency Share Option Translation Capital Revaluation Retained Total Capital Reserve Reserve Reserve Reserve Profits Equity Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Balance at 30 September 2019/1 October 2019 200,023 2,416 13,403 4,800 952 194,411 416,005 Initial application of MFRS 16 (Note 2.1) - - - - - (116) (116)
Balance at 30 September 2019/1 October 2019 (restated) 200,023 2,416 13,403 4,800 952 194,295 415,889 Fair value changes of intangible assets - - - - 1,409 - 1,409 Currency translation differences for foreign operation - - (5,031) - - - (5,031) Total other comprehensive income for the financial year - - (5,031) - 1,409 - (3,622) Profit for the financial year - - - - - 6,323 6,323 Total comprehensive income for the financial year - - (5,031) - 1,409 6,323 2,701 Share-based payments - 5,932 - - - - 5,932 Issuance of shares pursuant to ESOS 8,824 (2,718) - - - - 6,106 Issuance of shares pursuant to Warrants 3 - - - - - 3 Dividends to owners of the Company (Note 23) - - - - - (3,357) (3,357) Realisation of revaluation reserve - - - - (401) 401 - Total transactions with owners 8,827 3,214 - - (401) (2,956) 8,684
Balance at 30 September 2020 208,850 5,630 8,372 4,800 1,960 197,662 427,274
The annexed notes form an integral part of these financial statements. 52 NOTION VTEC BERHAD
STATEMENTS OF CHANGES IN EQUITY (CONT’D) For the financial year ended 30 September 2020
Non-distributable Distributable Accumulated Share Losses/ Share Option Retained Total Capital Reserve Profits Equity Company RM’000 RM’000 RM’000 RM’000
Balance at 1 October 2018 199,791 2,492 (12,673) 189,610 Profit for the financial year (representing comprehensive income) - - 41,012 41,012 Issuance of shares pursuant to ESOS 232 (76) - 156 Dividends to owners of the Company (Note 23) - - (3,331) (3,331) Total transactions with owners 232 (76) (3,331) (3,175) Balance at 30 September 2019 200,023 2,416 25,008 227,447 Profit for the financial year (representing comprehensive income) - - 817 817 Share-based payments - 5,932 - 5,932 Issuance of shares pursuant to ESOS 8,824 (2,718) - 6,106 Issuance of shares pursuant to Warrants 3 - - 3 Dividends to owners of the Company (Note 23) - - (3,357) (3,357) Total transactions with owners 8,827 3,214 (3,357) 8,684
Balance at 30 September 2020 208,850 5,630 22,468 236,948
The annexed notes form an integral part of these financial statements. 53 ANNUAL REPORT 2020
STATEMENTS OF CASH FLOWS For the financial year ended 30 September 2020
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES Profit before tax 6,840 14,090 835 41,020 Adjustments for:- Amortisation of deferred income on government grants (166) (187) - - Bad debts written off 4 24 - - Depreciation of property, plant and equipment 27,958 28,665 - 55 Depreciation of right-of-use assets 3,293 - - - Dividend income - - (4,000) (40,000) Loss/(Gain) on fair value adjustment of intangible assets 430 (46) - - Gain on disposal of plant and equipment (550) (464) - - Gain on disposal of right-of-use assets (5) - - - Impairment loss on plant and equipment 72 524 - - Impairment loss on receivables 774 - 500 - Increase in liabilities for retirement benefits 120 208 - - Insurance claims (12,217) (10,378) - - Interest expense 4,329 4,600 - - Interest income (1,267) (2,243) (1,123) (1,962) Inventories written down 1,771 2,402 - - Plant and equipment written off 109 239 - - Reversal of impairment loss on plant and equipment (6,951) (1,408) - - Reversal of inventories written down (4,474) (1,136) - - Share-based payments 5,932 - 2,493 - Unrealised (gain)/loss on foreign exchange (36) 538 - - Operating profit/(loss) before working capital changes 25,966 35,428 (1,295) (887) Changes in:- Inventories (136) (8,505) - - Receivables and prepayments (10,747) 5,928 (500) - Payables 29,550 (22,656) 75 (328) CASH FROM/(FOR) OPERATIONS AND BALANCE CARRIED FORWARD 44,633 10,195 (1,720) (1,215)
The annexed notes form an integral part of these financial statements. 54 NOTION VTEC BERHAD
STATEMENTS OF CASH FLOWS (CONT’D) For the financial year ended 30 September 2020
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
BALANCE BROUGHT FORWARD 44,633 10,195 (1,720) (1,215)
Payment for retirement benefits (9) (47) - - Interest paid (4,329) (4,600) - - Tax (paid)/refunded (5,025) (22,349) (3) 134 NET CASH FROM/(FOR) OPERATING ACTIVITIES 35,270 (16,801) (1,723) (1,081)
CASH FLOWS (FOR)/FROM INVESTING ACTIVITIES Increase in intangible assets (343) (2,283) - - Advances to subsidiaries - - (24,290) (11,141) Grant received 2,567 2,805 - - Dividend received - - 4,000 40,000 Interest received 1,267 2,243 1,123 1,962 Insurance claims received 12,217 89,745 - - Proceeds from disposal of plant and equipment 2,208 8,003 - - Proceeds from disposal of right-of-use assets 340 - - - Purchase of property, plant and equipment 24 (32,429) (42,321) - - Purchase of right-of-use assets 24 (582) - - - NET CASH (FOR)/FROM INVESTING ACTIVITIES (14,755) 58,192 (19,167) 30,821
CASH FLOWS (FOR)/FROM FINANCING ACTIVITIES Repayment to subsidiaries - - (867) (168) Dividend paid (3,357) (3,331) (3,357) (3,331) Drawdown of term loans 24 - 12,777 - - Drawdown of lease liabilities 24 5,538 - - - Decrease in short-term loans and borrowings (net) 24 - (8,576) - - Proceeds from issuance of shares 6,109 156 6,109 156 Payment for lease liabilities (9,593) - - - Repayment of hire purchase obligations 24 - (7,235) - - Repayment of term loans 24 (3,093) (5,941) - - NET CASH (FOR)/FROM FINANCING ACTIVITIES (4,396) (12,150) 1,885 (3,343)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 16,119 29,241 (19,005) 26,397
CASH AND CASH EQUIVALENTS BROUGHT FORWARD 68,834 41,864 51,682 25,285
CURRENCY TRANSLATION DIFFERENCES (2,241) (2,271) - -
CASH AND CASH EQUIVALENTS CARRIED FORWARD 10 82,712 68,834 32,677 51,682
The annexed notes form an integral part of these financial statements. 55 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 September 2020
1. GENERAL INFORMATION
The Company is a public company limited by shares, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad.
The principal activities of the Company are those of investment holding and providing management services to its subsidiaries. The principal activities and other details of the subsidiaries are disclosed in Note 7 to the financial statements.
The registered office of the Company is located at 12th Floor, Menara Symphony, No. 5, Jalan Professor Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya, Selangor Darul Ehsan and its principal place of business is located at Lot 6123, Jalan Haji Salleh, Batu 5½ Jalan Meru, 41050 Klang, Selangor Darul Ehsan.
The presentation currency of the financial statements is Ringgit Malaysia (“RM”) and all values are rounded to the nearest thousand (“RM’000”) except when otherwise indicated.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 14 January 2021.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of Preparation of Financial Statements
The impact of the COVID-19 pandemic (“COVID-19”) on the global economy and the operating activities of many businesses has resulted in a climate of considerable uncertainty. The ultimate impact of this pandemic on the Group is uncertain at the date of approval these financial statements.
However, despite the uncertainty arising from the outbreak of COVID-19, the Group regards the pandemic as an opportunity for the Group to diversify into the healthcare segment especially due to the heightening awareness and demand for the Personal Protective Equipment and medical related components as disclosed in Note 31.
The directors of the Group have assessed and concluded that the appropriateness of applying the going concern basis in preparing the financial statements of the Group for the financial year ended 30 September 2020 is correct.
The financial statements of the Group are prepared under the historical cost convention, modified to include other bases of measurement as disclosed in other sections of the significant accounting policies, and in compliance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
The following MFRSs became effective for the financial year under review:-
Effective for annual periods beginning MFRSs on or after
MFRS 16 Leases 1 January 2019 IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019 Amendments to MFRS 9 Prepayment Features with Negative Compensation 1 January 2019 Amendments to MFRS 119 Plan Amendment, Curtailment or Settlement 1 January 2019 Amendments to MFRS 128 Long-term Interests in Associates and Joint Ventures 1 January 2019 Annual Improvements to MFRS Standards 2015 - 2017 Cycle 1 January 2019 56 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.1 Basis of Preparation of Financial Statements (Cont’d)
The initial application of the above MFRSs did not have any significant impacts on the financial statements of the Group except as follows:-
MFRS 16 Leases
The initial application of MFRS 16 Leases, which replaces MFRS 117 Leases and other related interpretations, has resulted in certain changes in accounting policies for lessees. MFRS 16 eliminates the distinction between finance and operating leases for lessees and introduces a single lessee accounting model which requires a lessee to recognise assets and liabilities for all leases with certain recognition exemptions. A lessee is required to recognise a right-of-use asset (representing its right to use the underlying leased asset) and a lease liability (representing its obligation to make lease payments).
The Group has elected to apply the new requirements of MFRS 16 from 1 October 2019 with the following cumulative effects of initial application recognised at that date without restating the comparative information:-
Brought forward from Effect of preceding adopting year MFRS 16 Adjusted Note RM’000 RM’000 RM’000
Group Statement of financial position as at 1 October 2019 (extract) Property, plant and equipment (i) 328,709 (45,376) 283,333 Right-of-use assets (i) (ii) - 47,214 47,214 Loans and borrowings (i) 65,954 (35,640) 30,314 Lease liabilities (ii) - 37,594 37,594 Retained profits (ii) 194,411 (116) 194,295
(i) For leases that were previously classified as finance leases in accordance with MFRS 117, the carrying amounts of the right-of-use assets at 1 October 2019 were those brought forward from 30 September 2019 measured applying MFRS 117. The underlying assets were reclassified from property, plant and equipment and would be accounted for in accordance with MFRS 16 from 1 October 2019.
(ii) For leases that were previously classified as operating leases in accordance with MFRS 117, the Group recognised and measured the right-of-use assets and lease liabilities at 1 October 2019 at the present value of the remaining lease payments, discounted using a weighted average incremental borrowing rate of 5.64% per annum. 57 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.1 Basis of Preparation of Financial Statements (Cont’d)
The Group has not applied the following MFRSs which have been issued as at the end of the reporting period but are not yet effective:-
Effective for annual periods beginning MFRSs (issued as at the end of the reporting period) on or after
MFRS 17 Insurance Contracts 1 January 2023 Amendments to MFRS 3: Definition of a Business 1 January 2020 Amendments to MFRS 3: Reference to the Conceptual Framework 1 January 2022 Amendments to MFRS 4: Extension of the Temporary Exemption from Applying MFRS 9 At issue date of 17 August 2020 Amendments to MFRS 9, MFRS 139 and MFRS 7: Interest Rate Benchmark Reform 1 January 2020 Amendments to MFRS 9, MFRS 139, MFRS 7, MFRS 4 and MFRS 16: Interest Rate 1 January 2021 Benchmark Reform - Phase 2 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Deferred Investor and its Associate or Joint Venture Amendments to MFRS 16: COVID-19-Related Rent Concessions 1 June 2020 Amendments to MFRS 17 Insurance Contracts 1 January 2023 Amendments to MFRS 101 and MFRS 108: Definition of Material 1 January 2020 Amendments to MFRS 101: Classification of Liabilities as Current or Non-current 1 January 2023 Amendments to MFRS 116: Property, Plant and Equipment - Proceeds before Intended Use 1 January 2022 Amendments to MFRS 137: Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022 Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020 Annual Improvements to MFRS Standards 2018 - 2020 1 January 2022
Management foresees that the initial application of the above MFRSs will not have any significant impacts on the financial statements.
2.2 Basis of Consolidation
A subsidiary is an entity that is controlled by another entity. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to the end of the reporting period using the acquisition method. Under the acquisition method, the consideration transferred, the identifiable assets acquired and the liabilities assumed are measured at their acquisition-date fair values. The components of non-controlling interests that are present ownership interests are measured at the present ownership instruments’ proportionate share in the recognised amounts of the identifiable net assets acquired. All other components of non-controlling interests are measured at their acquisition-date fair value and any resulting gain or loss is recognised in profit or loss. All acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss as incurred. 58 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.2 Basis of Consolidation (Cont’d)
Goodwill at the acquisition date is measured as the excess of (i) over (ii) below:
(i) the aggregate of: (a) the acquisition-date fair value of the consideration transferred; (b) the amount of any non-controlling interests; and (c) in a business combination achieved in stages, the acquisition-date fair value of the previously held equity interest in the acquiree.
(ii) the net of the acquisition-date fair values of the identifiable assets acquired and the liabilities assumed.
Goodwill is recognised as an asset at the aforementioned amount less accumulated impairment losses, if any. The impairment policy is disclosed in Noted 2.7. When the above (ii) exceeds (i), the excess represents a bargain purchase gain and, after reassessment, is recognised in profit or loss.
A subsidiary is consolidated from the acquisition date, being the date on which control is obtained, and continues to be consolidated until the date when control is lost. Intragroup balances, transactions, income and expenses are eliminated in full on consolidation. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. All changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Upon loss of control of a subsidiary, the assets (including any goodwill) and liabilities of, and any non-controlling interests in the subsidiary are derecognised. All amounts recognised in other comprehensive income in relation to the subsidiary are accounted for on the same basis as would be required if the related assets or liabilities had been directly disposed of. Any consideration received and any investment retained in the former subsidiary is recognised at their fair values. The resulting difference is then recognised as a gain or loss in profit or loss.
2.3 Property, Plant and Equipment
Property, plant and equipment, other than freehold land and capital work-in-progress, are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land and capital work-in-progress are stated at cost less impairment losses, if any. The impairment policy is disclosed in Note 2.7.
Capital work-in-progress and freehold land are not depreciated. Other property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets using the following annual rates:-
Factory buildings 2% - 11% Factory equipment and machinery 5% - 25% Furniture, fittings and office equipment 10% - 30% Motor vehicles 20% Renovation 20%
The residual value, useful life and depreciation method of an asset are reviewed at least at the end of each reporting period and any changes in expectations from previous estimates are accounted for prospectively as changes in accounting estimates. 59 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.3 Property, Plant and Equipment (Cont’d)
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset, being the difference between the net disposal proceeds and the carrying amount, is recognised in profit or loss.
Fully depreciated plant and equipment are retained in the financial statements and no further charge for depreciation is made, until they are no longer in use.
2.4 Leases
A lease is a contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration.
Lessee Accounting
Initial Recognition and Measurement
When the Group acts as a lessee, it recognises a right-of-use asset (representing its right to use the underlying leased asset) and a lease liability (representing its obligation to make lease payments) at the commencement date. The Group has elected not to apply such recognition principle to short-term leases (which have a lease term of 12 months or less) and leases of low-value assets. The lease payments associated with those leases are recognised as an expense on a straight-line basis over the lease term.
A right-of-use asset is initially recognised at cost, which comprises the initial amount of lease liability, any lease payments made at or before the commencement date (less any lease incentives), any initial direct costs and any estimated dismantling, removing and restoring costs.
A lease liability is initially recognised at the present value of the unpaid lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the lessee’s incremental borrowing rate. The unpaid lease payments included in the measurement of lease liability comprise fixed payments (less any lease incentives), variable lease payments linked to an index or a rate, expected amounts payable under residual value guarantees, the exercise price of a purchase option reasonably certain to be exercised and the penalties of a termination option reasonably certain to be exercised.
Subsequent Measurement
A right-of-use asset is subsequently measured at cost less accumulated depreciation and accumulated impairment losses, if any, and adjusted for any remeasurement of lease liability. The impairment policy is disclosed in Note 2.7.
If the lease transfers ownership of the underlying asset to the lessee by the end of the lease term or if the cost of the right-of-use asset reflects that a purchase option will be exercised, the right-of-use asset is depreciated on a straight-line basis from the commencement date to the end of its useful life. Otherwise, the right-of-use asset is depreciated from the commencement date to the earlier of the end of its useful life or the end of the lease term.
A lease liability is subsequently measured at amortised cost, and remeasured to reflect any reassessment (arising from changes to the lease payments) or lease modifications. 60 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.4 Leases (Cont’d)
Lessee Accounting
Previous Financial Years
Prior to 1 October 2019, the Group classified each lease as either an operating lease or a finance lease.
A finance lease, including hire purchase, was initially recognised as an asset and liability at the fair value of the leased asset or, if lower, the present value of the minimum lease payments. The minimum lease payments were subsequently apportioned between the finance charge and the reduction of the outstanding liability so as to produce a constant periodic rate of interest on the remaining balance of the liability. The depreciation policy for depreciable leased assets was consistent with that for equivalent owned assets.
Lease payments under an operating lease were recognised as an expense on a straight-line basis over the lease term.
2.5 Investments in Subsidiaries
As required by the Companies Act 2016, the Company prepares separate financial statements in addition to the consolidated financial statements. In the separate financial statements of the Company, investments in subsidiaries are stated at cost less impairment losses, if any. The impairment policy is disclosed in Note 2.7.
2.6 Intangible Assets
Intangible assets of the Group consist of digital assets. Intangible assets are stated at valuation less accumulated impairment losses, if any. The impairment policy is disclosed in Note 2.7.
Revaluations are made with sufficient regularity at the end of each reporting period such that the carrying amounts of the assets do not differ materially from their fair values at the end of the reporting period.
A revaluation increase is recognised in other comprehensive income and accumulated in equity as revaluation surplus or recognised in profit or loss to the extent that the increase reverses a revaluation decrease of the same asset previously recognised in profit or loss. A revaluation decrease is recognised in profit or loss or recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of the same asset.
2.7 Impairment of Non-financial Assets
At the end of the reporting period, the Group assesses whether there is any indication that a non-financial asset, other than inventories, may be impaired. If any such indication exists, the recoverable amount of the asset, being the higher of its fair value less costs of disposal and its value in use, is estimated. Irrespective of whether there is any indication of impairment, goodwill is tested for impairment annually. Any excess of the carrying amount of the asset over its recoverable amount represents an impairment loss and is recognised in profit or loss.
An impairment loss on an asset, other than goodwill, is reversed if there has been a change in the estimates used to determine the recoverable amount and it is reversed only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised. The reversal is recognised in profit or loss. An impairment loss on goodwill is not reversed. 61 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.8 Inventories
Inventories are valued at the lower of cost (determined principally on the weighted average basis) and net realisable value. Cost consists of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and costs necessary to make the sale.
2.9 Financial Assets
Financial assets of the Group consist of receivables and cash and cash equivalents.
Initial Recognition and Measurement
A financial asset is recognised in the statements of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. Trade receivables that do not contain a significant financing component are initially recognised at their transaction price (as defined in Note 2.14). Other financial assets are initially recognised at fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
Subsequent Measurement
Financial assets are subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss in accordance with their classification on the basis of both the business model within which they are held and their contractual cash flow characteristics.
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold financial assets to collect contractual cash flows and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. All receivables and cash and cash equivalents are classified under this category. Any gain or loss is recognised in profit or loss when the financial asset is derecognised, reclassified, through the amortisation process or in order to recognise impairment gains or losses.
Impairment
At each reporting date, the Group recognises a loss allowance for expected credit losses on a financial asset measured at amortised cost. The loss allowance is measured at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the loss allowance is measured at an amount equal to 12-month expected credit losses. Any adjustment to the loss allowance is recognised in profit or loss as an impairment gain or loss.
Irrespective of whether there is any significant increase in credit risk since initial recognition, the loss allowance for trade receivables is always measured at an amount equal to lifetime expected credit losses using the simplified approach in accordance with MFRS 9 Financial Instruments. Such lifetime expected credit losses are calculated using a provision matrix based on historical credit loss experience and adjusted for reasonable and supportable forward-looking information that is available without undue cost or effort.
The expected credit losses for a credit-impaired financial asset are measured as the difference between the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The gross carrying amount of a credit-impaired financial asset is directly written off when there is no reasonable expectation of recovery. 62 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.9 Financial Assets (Cont’d)
Derecognition
A financial asset is derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or all the risks and rewards of ownership are substantially transferred. A direct write-off of gross carrying amount when there is no reasonable expectation of recovering a financial asset constitutes a derecognition event.
2.10 Financial Liabilities
Financial liabilities of the Group consist of payables, loans and borrowings and financial guarantee contracts.
Initial Recognition and Measurement
A financial liability is recognised in the statements of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. A financial liability is initially recognised at fair value minus, in the case of a financial liability not at fair value through profit or loss, transaction costs.
Subsequent Measurement
All payables and loans and borrowings are subsequently measured at amortised cost. Any gain or loss is recognised in profit or loss when the financial liability is derecognised and through the amortisation process.
Financial guarantee contracts are subsequently measured at the higher of the amount of loss allowance and the amount initially recognised less any cumulative income recognised.
Derecognition
A financial liability is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires.
2.11 Functional and Foreign Currencies
Foreign Currency Transactions and Translation
The consolidated financial statements and separate financial statements of the Company are presented in Ringgit Malaysia, which is also the Company’s functional currency, being the currency of the primary economic environment in which the entity operates. Items included in the financial statements of each individual entity within the Group are measured using the individual entity’s own functional currency.
A foreign currency transaction is recorded in the functional currency using the exchange rate at transaction date. At the end of the reporting period, foreign currency monetary items are translated into the functional currency using the closing rate. Foreign currency non-monetary items measured at cost are translated using the exchange rate at transaction date, whereas those measured at fair value are translated using the exchange rate at valuation date. Exchange differences arising from the settlement or translation of monetary items are recognised in profit or loss. Any exchange component of the gain or loss on a non-monetary item is recognised on the same basis as that of the gain or loss, i.e. in profit or loss or in other comprehensive income. 63 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.11 Functional and Foreign Currencies (Cont’d)
Foreign Operations
Assets and liabilities of foreign operations are translated to the Group’s presentation currency at the exchange rates at the end of the reporting period. Income, expenses and other comprehensive income of foreign operations are translated at exchange rates at the dates of the transactions. All exchange differences arising from translation are taken directly to other comprehensive income and accumulated in equity.
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign subsidiary, or partial disposal involving loss of control over a subsidiary that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that foreign operation are reclassified to profit or loss as part of the gain or loss on disposal.
In addition, in relation to partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are reattributed to non-controlling interests and are not recognised in profit or loss.
In the consolidated financial statements, when the settlement of an intragroup loan is neither planned nor likely to occur in the foreseeable future, the exchange differences arising from translating such monetary item are considered to form part of a net investment in the foreign operation and are recognised in other comprehensive income.
2.12 Share Capital
Ordinary shares are classified as equity. Transaction costs that relate to the issue of new shares are accounted for as a deduction from equity.
Own shares purchased are held as treasury shares in accordance with the requirements of Section 127 of the Companies Act 2016. The total amount of consideration paid, including directly attributable costs, is recognised directly in equity. When treasury shares are distributed as share dividends, the cost of the shares distributed is applied in the reduction of distributable reserves. When treasury shares are resold in the open market, the difference between the sale consideration and the cost of the shares resold is adjusted to share capital. When treasury shares are cancelled, the cost of the shares cancelled is applied in the reduction of distributable reserves and the issued share capital is diminished by the shares so cancelled.
Dividends on shares declared and unpaid at the end of the reporting period are recognised as a liability whereas dividends proposed or declared after the reporting period are disclosed in the notes to the financial statements.
2.13 Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. The valuation techniques used include the following: 64 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.13 Fair Value Measurement (Cont’d)
(i) Market approach - which uses prices and other relevant information generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities.
(ii) Cost approach - which reflects the amount that would be required currently to replace the service capacity of an asset.
(iii) Income approach - which converts future amounts (e.g. cash flows or income and expenses) to a single current (i.e. discounted) amount.
The inputs to valuation techniques used to measure fair value are categorised into the following levels of fair value hierarchy:
(i) Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
(ii) Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
(iii) Level 3 - unobservable inputs for the asset or liability.
Any transfers between the levels of fair value hierarchy are deemed to have occurred at the end of the reporting period.
Financial Assets and Financial Liabilities
The carrying amounts of receivables, cash and cash equivalents, payables and loans and borrowings which are short-term in nature or repayable on demand are reasonable approximations of fair values. The fair values of long- term loans and borrowings are measured using present value technique by discounting the expected future cash flows using observable current market interest rates for similar liabilities (i.e. Level 2).
The fair values of financial guarantee contracts are estimated based on probability-adjusted discounted cash flow analysis after considering the probability of default by the debtors (i.e. Level 3).
2.14 Revenue from Contracts with Customers
The Group recognises revenue (by applying the following steps) to depict the transfer of promised goods or services to customers at the transaction price.
(i) Step 1: Identify contract - A contract is an agreement between two or more parties that creates enforceable rights and obligations.
(ii) Step 2: Identify performance obligations - Each promise to transfer distinct goods or services is identified as a performance obligation and accounted for separately. 65 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.14 Revenue from Contracts with Customers (Cont’d)
(iii) Step 3: Determine transaction price - The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. It is adjusted for the effects of variable consideration (e.g. discounts, rebates, incentives or penalties), significant financing component, non-cash consideration and consideration payable to customer.
(iv) Step 4: Allocate transaction price to performance obligations - The transaction price is allocated to each performance obligation on the basis of the relative (estimated) stand-alone selling prices of each distinct good or service promised in the contract.
(v) Step 5: Recognise revenue - Revenue is recognised when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). Revenue is recognised either over time or at a point in time depending on the timing of transfer of control.
Sales of Goods
The Group determines that the transfer of control of promised goods generally coincides with the transfer of risks and rewards of ownership. Accordingly, revenue from the sale of goods is recognised at a point in time when the significant risks and rewards of ownership have been transferred to the customer upon delivery.
Rendering of Services
The Company determines that the transfer of control of promised services generally coincides with the Company’s performance as the customer simultaneously receives and consumes the benefits of the performance as the Company performs. Accordingly, revenue from the rendering of services is recognised over time when the services are performed. The Company measures the progress towards complete satisfaction of the performance obligation using an output method, i.e. time elapsed.
2.15 Other Income
Dividend income is recognised in profit or loss only when the Company’s right to receive payment of the dividend is established, it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.
Interest income is recognised in profit or loss using the effective interest method.
2.16 Government Grants
Government grants are recognised when there is reasonable assurance that the Group will comply with the conditions attaching to the grants and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Grants related to assets are presented in the statements of financial position as deferred income which is amortised on a straight-line basis over the estimated useful lives of the assets. Grants related to income are presented under “other income” in the statements of comprehensive income. 66 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.17 Employee Benefits
Short-term Employee Benefits
Short-term employee benefits such as wages, salaries, bonuses and social security contributions are recognised in profit or loss in the period in which the associated services are rendered by the employee.
Defined Contribution Plans
As required by law, employers in Malaysia make contributions to the statutory pension scheme, Employees Provident Fund (“EPF”). Contributions to defined contribution plans are recognised in profit or loss in the period in which the associated services are rendered by the employee.
Defined Benefit Plan
The Group operates an unfunded final salary defined benefit plan for their employees in accordance with the local requirement prevailing in Thailand. The liability in respect of the defined benefit plan is the present value of the future benefits that employees have earned in return for their services rendered in the current and prior periods. The calculation is performed using the projected unit credit method, with actuarial valuations being carried out with sufficient regularity at an interval of not more than three years such that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the end of the reporting period. All components of defined benefit costs are recognised in profit or loss in the period in which they are incurred, except for re-measurements of the defined benefit liability which are recognised in other comprehensive income.
Share-based Payments
The Employees’ Share Option Scheme (“ESOS”) of the Company grants the Group’s eligible employees options to subscribe for shares in the Company at pre-determined subscription prices. These equity compensation benefits are treated as equity-settled share-based payment transactions and recognised in profit or loss with a corresponding increase in equity over the vesting period as share option reserve. The total amount to be recognised is determined by reference to the fair value of the share options at grant date and the estimated number of share options expected to vest on vesting date.
Upon expiry or exercise of the share option, the share option reserve is transferred to retained profits and to share capital if new ordinary shares are issued, respectively.
2.18 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, which is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are capitalised as part of the cost of the asset, until such time as the asset is substantially ready for its intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 67 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.19 Income Taxes
Income taxes for the financial year comprise current tax and deferred tax.
Current tax represents the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is provided for under the liability method in respect of all temporary differences between the carrying amount of an asset or liability and its tax base except for those temporary differences associated with goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and affects neither accounting nor taxable results at the time of the transaction.
A deferred tax liability is recognised for all taxable temporary differences, whereas a deferred tax asset is recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted by the end of the reporting period.
2.20 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, term deposits that are withdrawable on demand and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purpose of statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits, if any.
3. JUDGEMENTS AND ESTIMATION UNCERTAINTY
Judgements Made in Applying Accounting Policies
In the process of applying the accounting policies of the Group, management is not aware of any judgements, apart from those involving estimations, that can significantly affect the amounts recognised in the financial statements.
Sources of Estimation Uncertainty
The COVID-19 has had a major impact on the global economy. At the date of signing these financial statements, the ultimate impact of COVID-19 remains uncertain as the pandemic rages on in Malaysia and the rest of the world.
As a result, management have assessed the assets held by the Group as at 30 September 2020 to identify any indicators of impairment. Where a potential impairment is identified as a result of COVID-19 or otherwise, an estimate of the expected recoverable value of the asset has been made and compared to the current carrying value of the said asset, to account for such ensuing impairment, if any. These estimates, where applicable, have been derived from management’s planning assumption of the likely business performance over the next two years, taking into account their assumption of the impact of COVID-19 and reflecting impact of a protracted lockdown, footfall decline across key regions and gradual improvement in the following year. Where material, these significant estimates have been disclosed below and in the relevant notes to the financial statements. 68 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
3. JUDGEMENTS AND ESTIMATION UNCERTAINTY
Sources of Estimation Uncertainty (Cont’d)
Due to the significant uncertainty regarding the ultimate impact of COVID-19, the assumptions used in these estimates include an increased risk level of inherent uncertainty.
The key assumptions about the future, and other major sources of estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:-
Valuation of Inventories
Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates may result in revisions to the valuation of inventories. Any changes in these accounting estimates will result in revisions to the valuation of inventories (Note 8).
Impairment of Receivables
The Group recognises loss allowance for expected credit losses on receivables based on an assessment of credit risk. Such assessment involves judgements and estimation uncertainty in analysing information about past events, current conditions and forecasts of future economic conditions. Any changes in these accounting estimates will affect the carrying amounts of receivables (Note 9).
Impairment of Non-financial Assets
The Group reviewed its non-financial assets for indications of impairment and where such indications exist, the Group performed impairment test which involved significant judgements and estimation uncertainty in making key assumptions about future market and economic conditions, growth rates, profit margins, discount rate, etc. Any changes in these accounting estimates will affect the carrying amounts of non-financial assets (Note 4, Note 5, Note 6 and Note 7).
4. PROPERTY, PLANT AND EQUIPMENT
Factory Furniture, Freehold equipment fittings and Capital land and and office Motor work-in- buildings machinery equipment vehicles Renovation progress Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost Balance at 1 October 2018 88,975 392,310 26,111 7,197 31,427 22,292 568,312 Additions 231 40,509 1,143 246 5,844 25,366 73,339 Disposals - (14,759) (2) (435) (20) - (15,216) Write-offs - - (472) - (1,246) - (1,718) Transfer - 300 - - - (300) - Currency translation differences 1,832 2,707 71 49 27 68 4,754 Balance at 30 September 2019 91,038 421,067 26,851 7,057 36,032 47,426 629,471 69 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Factory Furniture, Freehold equipment fittings and Capital land and and office Motor work-in- buildings machinery equipment vehicles Renovation progress Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost (Cont’d) Balance at 1 October 2019 - Brought forward from preceding year 91,038 421,067 26,851 7,057 36,032 47,426 629,471 - Effect of adopting MFRS 16 - (49,875) - (75) - - (49,950) - Adjusted 91,038 371,192 26,851 6,982 36,032 47,426 579,521 Additions 497 19,843 1,362 348 5,874 4,505 32,429 Disposals - (5,538) - (145) (41) - (5,724) Write-offs - (113) (9,551) - - - (9,664) Transfer/Reclassification 46,596 1,360 - 75 - (47,956) 75 Currency translation differences (1,439) (2,132) (62) (38) (21) (70) (3,762) Balance at 30 September 2020 136,692 384,612 18,600 7,222 41,844 3,905 592,875
Depreciation and Impairment Losses Balance at 1 October 2018 Accumulated depreciation 7,238 213,454 12,408 5,925 19,193 - 258,218 Accumulated impairment loss - 12,060 9,344 194 1,169 - 22,767 7,238 225,514 21,752 6,119 20,362 - 280,985 Depreciation 791 22,255 1,087 366 4,166 - 28,665 Impairment loss - (882) (2) - - - (884) Disposals - (7,241) (1) (435) - - (7,677) Write-offs - - (421) - (1,058) - (1,479) Currency translation differences 107 996 29 20 - - 1,152 Balance at 30 September 2019 Accumulated depreciation 8,136 229,464 13,102 5,876 22,301 - 278,879 Accumulated impairment loss - 11,178 9,342 194 1,169 - 21,883 Balance carried forward 8,136 240,642 22,444 6,070 23,470 - 300,762 70 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Factory Furniture, Freehold equipment fittings and Capital land and and office Motor work-in- buildings machinery equipment vehicles Renovation progress Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Depreciation and Impairment Losses (Cont’d) Balance at 1 October 2019 - Balance brought forward from preceding year 8,136 240,642 22,444 6,070 23,470 - 300,762 - Effect on adopting of MFRS16 - (4,499) - (75) - - (4,574) - Adjusted 8,136 236,143 22,444 5,995 23,470 - 296,188 Depreciation 1,638 20,081 1,195 262 4,782 - 27,958 Impairment loss - 2 70 - - - 72 Reversal of impairment loss - (6,200) (129) (99) (523) - (6,951) Disposals - (3,921) - (145) - - (4,066) Write-offs - (4) (9,551) - - - (9,555) Transfer/Reclassification - - - 75 - - 75 Currency translation differences (99) (845) (24) (19) - - (987) Balance at 30 September 2020 Accumulated depreciation 9,675 241,654 13,795 5,975 27,083 - 298,182 Accumulated impairment loss - 3,602 210 94 646 - 4,552 9,675 245,256 14,005 6,069 27,729 - 302,734
Carrying Amount Balance at 1 October 2018 81,737 166,796 4,359 1,078 11,065 22,292 287,327 Balance at 30 September 2019 82,902 180,425 4,407 987 12,562 47,426 328,709 Balance at 30 September 2020 127,017 139,356 4,595 1,153 14,115 3,905 290,141 71 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
In the financial year ended 30 September 2018, a particular subsidiary incurred continuous gross losses straddling over two consecutive financial years. This anomaly triggered a substantial impairment loss on its plant and equipment amounting to RM12,396,743 based on the value in use assessment made on this cash generating unit.
In 2020, despite the ongoing COVID-19 pandemic, the said subsidiary recorded profit for the last 4 reporting quarters up to 30 September 2020. Accordingly, the Group reassessed its recoverable amount and reversed part of the previously recognised impairment amounting to RM6,951,425. The recoverable amount of the subsidiary’s plant and equipment was estimated based on value in use.
The estimate of value in use was determined using a pre-tax discount rate of 15.26%. The reversal of impairment loss was recognised in “Other Income” in the statements of comprehensive income as disclosed in Note 19.
The carrying amounts of property, plant and equipment pledged as security for credit facilities granted to the Group are as follows:-
Group 2020 2019 RM’000 RM’000
Freehold land and buildings 34,260 34,416 Factory equipment and machinery 21,393 61,160 55,653 95,576
The carrying amounts of plant and equipment acquired under hire purchase financing which remained outstanding as at the end of the reporting period are as follows:-
Group 2020 2019 RM’000 RM’000
Factory equipment and machinery - 38,639
The carrying amounts of property, plant and equipment acquired under term loan facilities which remained outstanding as at the end of the reporting period are as follows:-
Group 2020 2019 RM’000 RM’000
Freehold land and buildings 17,938 17,954 Factory equipment and machinery 21,393 22,521 39,331 40,475 72 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Furniture, fittings and office Motor equipment vehicles Total Company RM’000 RM’000 RM’000
Cost Balance at 1 October 2018 12 587 599 Movement during the year - - -
Balance at 30 September 2019 12 587 599 Movement during the year - - - Balance at 30 September 2020 12 587 599
Accumulated Depreciation Balance at 1 October 2018 12 532 544 Depreciation - 55 55
Balance at 30 September 2019 12 587 599 Depreciation - - - Balance at 30 September 2020 12 587 599
Carrying Amount Balance at 1 October 2018 - 55 55 Balance at 30 September 2019 - - - Balance at 30 September 2020 - - - 73 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
5. RIGHT-OF-USE ASSETS
Factory equipment Factory and Motor buildings machinery vehicles Total Group RM’000 RM’000 RM’000 RM’000
Cost - Brought forward from preceding year - - - - - Effect of adopting MFRS 16 3,154 49,875 75 53,104 - Adjusted 3,154 49,875 75 53,104 Additions 256 3,445 388 4,089 Disposals - (365) - (365) Transfer/Reclassification - - (75) (75) Balance at 30 September 2020 3,410 52,955 388 56,753
Accumulated Depreciation Balance at 1 October 2019 - Brought forward from preceding year - - - - - Effect of adopting MFRS 16 1,316 4,499 75 5,890 - Adjusted 1,316 4,499 75 5,890 Depreciation 687 2,563 43 3,293 Disposals - (30) - (30) Transfer/Reclassification - - (75) (75) Balance at 30 September 2020 2,003 7,032 43 9,078
Carrying Amount
Balance at 1 October 2019 - Adjusted 1,838 45,376 - 47,214
Balance at 30 September 2020 1,407 45,923 345 47,675
The comparative information is not presented as the Group has applied MFRS 16 using the modified retrospective approach.
The Group acquired leases a factory building from a third party for 1 - 3 years. The rights to use the factory equipment and machineries and motor vehicles were acquired under hire purchase financing whereby ownership will be transferred by the end of the lease terms of 3 to 5 years. 74 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
6. INTANGIBLE ASSETS
Group 2020 2019 RM’000 RM’000
Balance at 1 October 2019/2018 4,609 1,328 Additions 3,152 3,072 Disposal (2,809) (789) Fair value gain on revaluation (Recognised in other comprehensive income) 1,409 956 Fair value (loss)/gain on revaluation (Recognised in profit or loss) (430) 46 Balance at 30 September 5,931 4,609
On 30 September 2020, the Group’s digital assets were revalued by the management. The surpluses arising from the revaluations have been credited to other comprehensive income and accumulated in equity under the revaluation reserve.
A revaluation decrease of RM429,901 (30.9.2019 - Nil), representing the write-down of certain digital assets to the recoverable amount was recognised in “Administrative and Other Operating Expenses” in the statements of comprehensive income as disclosed in Note 19. The recoverable amount was based on its fair value less costs of disposal.
The fair values of digital assets are directly measured using their unadjusted closing prices in active markets (i.e. Level 1).
If the intangible assets were measured using the cost model, the carrying amounts would be as follows:-
Group 2020 2019 RM’000 RM’000
Balance at 1 October 2019/2018 3,657 1,374 Additions 3,152 3,072 Disposal (2,408) (789) Balance at 30 September 4,401 3,657
7. INVESTMENTS IN SUBSIDIARIES
Company 2020 2019 RM’000 RM’000
Unquoted shares, at cost 98,862 98,862 Employees’ shares options granted to employees of subsidiaries 5,477 2,038 Accumulated impairment losses (20,560) (20,560) 83,779 80,340 75 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
7. INVESTMENTS IN SUBSIDIARIES (CONT’D)
The details of the subsidiaries are as follows:-
Principal Effective Place of Equity Interest Business/ 2020 2019 Country of Name of Subsidiary Incorporation % % Principal Activities
Notion Venture Malaysia 100 100 Design and volume production of high precision Sdn. Bhd. (“NVSB”) metal machining of hard disk drive, computer, consumer electronic and electrical and automotive industries’ components, and its related research and development activities; and manufacturing of the personal protective equipment and medical related materials, components, devices or products and other related activities.
Notion International Malaysia 100 100 Manufacturing of high precision components; (M) Sdn. Bhd. and production, sales and marketing of personal protective equipment and medical related components, devices and products.
Notion (Thailand) Co. Ltd. (a) Thailand 100 100 Design and manufacture of precision components.
Kaiten Precision (M) Sdn. Bhd. Malaysia 100 100 Design and development leading to the mass- production of high precision micro-parts and related research and development activities.
Novid PPE Sdn. Bhd. Malaysia 100 100 Investment in digital and computing technology (formerly known as and production including sales and marketing Trendi Notion Sdn. Bhd.) of personal protective equipment and medical related components, devices and products.
Intech Precision Sdn. Bhd. Malaysia 100 100 Designing, developing, manufacturing and marketing of precision jigs and fixtures, tools and dies for stamping, precision mould parts for stamping, trim and form tools for the semiconductor industry, and precisioning machine parts for the automotive and other high value- added industries.
NV Technology Sdn. Bhd. Malaysia 100 100 Design, development and modification of cutting tool geometry, regrind and re-sharpening of special cutting tools using computer numerical control tools and cutter grinder and other grinding operations and also involved in the marketing of diamond abrasive grinding wheels, polycrystalline diamond and polycrystalline cubic nitride inserts. 76 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
7. INVESTMENTS IN SUBSIDIARIES (CONT’D)
The details of the subsidiaries are as follows (Cont’d):-
Principal Effective Place of Equity Interest Business/ Country of 2020 2019 Name of Subsidiary Incorporation % % Principal Activities
Diaphragm Tech Sdn. Bhd. Malaysia 100 100 Inactive.
Swiss Impression Sdn. Bhd. Malaysia 100 100 Inactive.
Notion Venture (Hong Kong) Hong Kong 100 100 Inactive. Limited (b)
Subsidiary of NVSB Autic Mekki Sdn. Bhd. Malaysia 100 100 Providing surface treatment, electrolysis nickel plating, chrome plating, electroplating and anodizing metal or other similar material.
(a) not audited by Crowe Malaysia PLT. (b) not required to be audited, and consolidated using unaudited financial statements.
8. INVENTORIES
Group 2020 2019 RM’000 RM’000
Cost Raw materials 11,005 5,643 Work-in-progress 12,311 10,560 Consumables 5,341 4,707 Finished goods 17,253 22,402
Net realisable value Raw materials 26 - Work-in-progress 379 - Finished goods 598 762 46,913 44,074
Recognised in profit or loss:- Inventories recognised as cost of sales 93,932 83,670 Inventories written down 1,771 2,402 Reversal of inventories previously written down (4,474) (1,136) 77 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
9. RECEIVABLES
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Trade receivables:- - Unrelated parties 71,039 65,250 - - - Allowance for impairment loss (497) (316) - - 70,542 64,934 - - Other receivables:- - Unrelated parties 9,171 6,880 - - - Related party 500 - 500 - - Allowance for impairment loss (538) (38) (500) - 9,133 6,842 - - - Subsidiaries - - 123,497 99,207 9,133 6,842 123,497 99,207 79,675 71,776 123,497 99,207
The currency profile of receivables is as follows:-
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Euro 16,547 14,851 - - Ringgit Malaysia 27,357 17,826 123,497 99,207 Thai Baht 11,666 12,805 - - United States Dollar 24,096 26,294 - - Others 9 - - - 79,675 71,776 123,497 99,207 78 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
9. RECEIVABLES (CONT’D)
Trade Receivables
The Group determines credit risk concentrations in terms of counterparties and geographical areas. As at 30 September 2020, there were 2 (2019 - 3) major customers that accounted for 10% or more of the Group’s trade receivables and the total outstanding balances due from these major customers amounted to RM24,438,530 (2019 - RM33,980,188). The credit risk concentration profile by geographical areas of trade receivables is as follows:-
Group 2020 2019 RM’000 RM’000
Belgium 1,487 1,141 Brazil 316 1,353 China 914 3,311 Hong Kong 565 587 Japan 1,851 1,694 Malaysia 18,801 11,446 Mexico 766 2,494 Poland 8,476 3,689 Thailand 25,437 28,388 United States of America 10,736 10,450 Others 1,193 381 70,542 64,934
The credit terms of trade receivables range from 30 to 90 days (2019 - 30 to 90 days). The Group uses past due information to assess the credit risk of trade receivables. The analysis by past due status is as follows:-
Group 2020 2019 RM’000 RM’000
Not past due 40,557 39,443 Past due 1 to 30 days 15,132 16,158 Past due 31 to 120 days 13,074 8,866 Past due more than 120 days 1,779 467 70,542 64,934
The Group determines that a trade receivable is credit-impaired when the customer is experiencing significant financial difficulty and has defaulted in payments. Unless otherwise demonstrated, the Group generally considers a default to have occurred when the trade receivable is more than 90 days past due. The gross carrying amount of a credit-impaired trade receivable is directly written off when there is no reasonable expectation of recovery. This normally occurs when there is reasonable proof of customer insolvency. 79 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
9. RECEIVABLES (CONT’D)
Trade Receivables (Cont’d)
The Group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses using the simplified approach in accordance with MFRS 9. The changes in the loss allowance are as follows:-
Group 2020 2019 RM’000 RM’000
Balance at 1 October 2019/2018 316 316 Impairment loss recognised 274 - Impairment loss written off (93) - Balance at 30 September 497 316
The above loss allowance is in respect of individually assessed credit-impaired trade receivables. Based on the low historical observed default rates (adjusted for forward-looking estimates), the expected credit losses on trade receivables that are not credit-impaired are not considered to be material and hence, have not been recognised.
Other Receivables
Other receivables are unsecured and non-interest bearing. The amounts owing by subsidiaries are repayable on demand. The amounts owing by unrelated parties and related party mainly consist of advances and refundable deposits which have no fixed repayment terms.
The Group measures the loss allowance at an amount equal to lifetime expected credit losses. The changes in the loss allowance are as follows:-
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Balance at 1 October 2019/2018 38 38 - - Impairment loss recognised 500 - 500 - Balance at 30 September 538 38 500 -
The above loss allowance was individually determined after considering the adverse financial conditions of the other receivables who have defaulted/delayed in payments. 80 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
10. CASH AND CASH EQUIVALENTS
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Highly liquid investments 25,411 46,200 25,411 46,200 Term deposits (fixed rate) 2,143 2,083 2,143 2,083 Cash and bank balances 55,158 20,551 5,123 3,399 82,712 68,834 32,677 51,682
The effective interest rate of term deposits as at the end of reporting period was 2.68% (2019 - 3.50% to 4.62%) per annum.
Cash and cash equivalents are placed with reputable financial institutions with low credit risk. Accordingly, their expected credit losses are not considered to be material and hence, have not been recognised.
The currency profile of cash and cash equivalents is as follows:-
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Euro 1,527 2,313 - - Ringgit Malaysia 41,123 58,460 32,677 51,682 Thai Baht 4,117 7,247 - - United States Dollar 35,915 801 - - Others 30 13 - - 82,712 68,834 32,677 51,682
11. SHARE CAPITAL
No. of ordinary shares (‘000) with no par value RM’000
Issued and fully paid:- Balance at 1 October 2018 332,823 199,791 Issuance of shares pursuant to ESOS 353 232 Balance at 30 September 2019 333,176 200,023 Issuance of shares pursuant to Warrants 4 3 Issuance of shares pursuant to ESOS 11,581 8,824 Bonus issue 168,325 - Balance at 30 September 2020 513,086 208,850
On 17 March 2020, the Company obtained shareholders’ approval at its Extraordinary General Meeting for a bonus issue of 168,325,033 new ordinary shares on the basis of 1 bonus share for every 2 existing ordinary shares. The bonus issue was completed on 18 May 2020. 81 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
11. SHARE CAPITAL (CONT’D)
The shareholders of the Company, by a resolution passed at the Extraordinary General Meeting held on 23 February 2017, approved the Long Term Incentive Plan comprising ESOS and Executive Share Grant Scheme. The ESOS became effective on 24 February 2017.
The principal features of the ESOS are as follows:-
(i) At any point of time when the offer is made, the maximum number of shares to be issued under the ESOS shall not exceed 15 % of the total issued and fully paid-up share capital of the Company during the duration of the ESOS.
(ii) An employee (including executive directors) of the Group shall be eligible to participate in the ESOS if, as at the date of offer, the employee is at least 18 years of age and has been confirmed and serving on a full time basis.
(iii) All non-executive directors who have been appointed to the Board shall be eligible to participate in the ESOS in accordance with the Listing Requirements of Bursa Malaysia Securities Berhad and subject to the Constitution of the Company.
(iv) The ESOS shall be valid for a duration of 5 years from the effective date.
(v) The exercise price shall be determined based on the weighted average market price of shares for the 5 market days immediately preceding the date of offer with a discount of not more than 10%.
(vi) The employees’ entitlement to the options is vested upon acceptance of the offer by the grantee, which shall be no later than 30 days from the date of offer.
(vii) The new shares to be allotted and issued upon exercise of any options granted under the scheme will, upon allotment and issuance, rank pari passu in all respects with the then existing shares and paid-up shares in the Company, save and except that the new shares so allotted and issued will not be entitled to any right, dividend, allotment and/or distribution declared, made or paid, the entitlement date of which precedes the date of exercise of the options.
The movements in the number of options during the financial year are as follows:-
Weighted Number of Weighted Average Options Over Average Weighted Remaining Ordinary Exercise Average Contractual Shares Price Share Price Life RM RM RM
As at 1 October 2018 10,270,500 0.53 Exercised (353,200) 0.44 0.64 Outstanding as at 30 September 2019 9,917,300 0.51 3.0 years Exercisable as at 30 September 2019 9,444,600
As at 1 October 2019 9,917,300 0.51 Granted 21,000,000 0.68 Bonus issue 2,986,600 Exercised (11,580,798) 0.53 0.74 Outstanding as at 30 September 2020 22,323,102 0.59 1.4 years Exercisable as at 30 September 2020 21,850,402 82 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
11. SHARE CAPITAL (CONT’D)
The fair value of share options granted since the effective date of the ESOS are measured using the Black Scholes Model with the following inputs:-
Option 1 Option 2 Option 3
Grant date 27.2.2017 12.12.2017 28.5.2020
Fair value at grant date (RM) 0.36 0.22 0.28
Weighted average share price (RM) 0.88 0.53 0.65 Exercise price (RM) 0.80 0.44 0.56 Expected volatility (%) 45.25 55.80 60.80 Option life (years) 4.4 4.2 3.0 Expected dividends (%) 2.26 5.66 1.14 Risk-free interest rate (%) 3.69 3.68 2.27
The expected volatility reflects the assumption that historical volatility is indicative of future trends but may not necessarily be the actual outcome. No other features of the share options granted were incorporated into the measurement of fair value.
12. LOANS AND BORROWINGS
Group 2020 2019 RM’000 RM’000
Secured Hire purchase payables (fixed rate) - 35,640 Term loans (floating rate) 27,221 30,314 27,221 65,954
Disclosed as:- - Current liabilities 6,800 13,345 - Non-current liabilities 20,421 52,609 27,221 65,954
Hire purchase payables are secured against the assets acquired thereunder (Note 4). Term loans are secured against certain property, plant and equipment (Note 4).
The effective interest rate of loans and borrowings as at 30 September 2020 was 6.45% (2019 - 6.53% to 7.27%) per annum. 83 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
12. LOANS AND BORROWINGS (CONT’D)
Hire Purchase Payables
The hire purchase are repayable as follows:-
Group 2020 2019 RM’000 RM’000
Minimum hire purchase payments:- - Within 1 year - 10,280 - Later than 1 year and not later than 2 years - 10,247 - Later than 2 years and not later than 5 years - 19,939
Total contractual undiscounted cash flows - 40,466 Future finance charges - (4,826) Present value of hire purchase payables: - Within 1 year - 8,043 - Later than 1 year and not later than 2 years - 8,605 - Later than 2 years and not later than 5 years - 18,992 - 35,640
The fair values of hire purchase payables are measured using present value technique by discounting the expected future cash flows using observable current market interest rates for similar liabilities (i.e. Level 2). The fair values measured are considered to be reasonably close to the carrying amounts reported as the observable current market interest rates also approximate to the effective interest rates of hire purchase payables.
Term Loans
Term loans are repayable over 1 to 7 years. The repayment analysis is as follows:-
Group 2020 2019 RM’000 RM’000
Gross loan instalments:- - Within 1 year 8,594 7,436 - Later than 1 year and not later than 2 years 8,139 8,563 - Later than 2 years and not later than 5 years 17,555 18,576 - Later than 5 years 139 4,418 Total contractual undiscounted cash flows 34,427 38,993 Future finance charges (7,206) (8,679) 27,221 30,314 84 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
12. LOANS AND BORROWINGS (CONT’D)
Term Loans (Cont’d)
Term loans are repayable over 1 to 7 years. The repayment analysis is as follows (Cont’d):-
Group 2020 2019 RM’000 RM’000
Present value of term loans:- - Within 1 year 6,800 5,302 - Later than 1 year and not later than 2 years 6,803 6,803 - Later than 2 years and not later than 5 years 13,487 15,774 - Later than 5 years 131 2,435 27,221 30,314
The fair values of term loans are measured using present value technique by discounting the expected future cash flows using observable current market interest rates for similar liabilities (i.e. Level 2). The fair values measured were considered to be reasonably close to the carrying amounts reported as the observable current market interest rates also approximate to the effective interest rates of term loans.
13. LEASE LIABILITIES
Group 2020 2019 RM’000 RM’000
Gross lease liabilities:- - Within 1 year 13,040 - - 1 to 5 years 27,104 - - After 5 years 923 -
Total contractual undiscounted cash flows 41,067 - Future finance charges (4,021) - Present value of lease liabilities 37,046 -
Disclosed as:- - Current liabilities 11,000 - - Non-current liabilities 26,046 - 37,046 -
The incremental borrowing rate applied to lease liabilities as at 30 September 2020 ranged from 1.32% to 6.54% per annum. 85 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
14. RETIREMENT BENEFITS
The Group operates final salary defined benefits plan with guaranteed lump sum payment at retirement and early retirement for its eligible employees.
The present value of defined benefit obligation is as follows:-
Group 2020 2019 RM’000 RM’000
Balance at 1 October 2019/2018 537 359 Defined benefit costs 120 208 Paid during the year (9) (47) Currency translation differences (21) 17 Balance at 30 September 627 537
The components of defined benefit costs are as follows:-
Group 2020 2019 RM’000 RM’000
Current service cost 106 201 Interest expense 14 7 120 208
The principal actuarial assumptions used to determine the present value of the defined benefit obligation are as follows:-
Group 2020 2019 % %
Discount rate 1.36 2.85 Future salary growth 3.50 5.67
The following table demonstrates the sensitivity analysis of the defined benefit obligation if significant actuarial assumptions at the end of each reporting period changed by one hundred (100) basis points with all other variables held constant:-
Group 2020 2019 RM’000 RM’000
Increase in discount rate by 1% 568 484 Decrease in discount rate by 1% 692 597 Increase in expected rate of salary by 1% 694 603 Decrease in expected rate of salary by 1% 565 477
The weighted average duration of the defined benefit obligations is 10.06 years. 86 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
15. DEFERRED TAX LIABILITIES
Group 2020 2019 RM’000 RM’000
Balance at 1 October 2019/2018 12,099 7,024 Deferred tax expense relating to origination and reversal of temporary differences 865 1,595 Deferred tax liabilities (over)/under provided in the prior year (4,342) 3,480 Balance at 30 September 8,622 12,099
Group 2020 2019 RM’000 RM’000
In respect of (deductible)/taxable temporary differences of:- - Inventories (1,152) (2,033) - Financial instruments (2,505) 1,188 - Property, plant and equipment 12,279 12,944 8,622 12,099
16. DEFERRED INCOME ON GOVERNMENT GRANT
Group 2020 2019 RM’000 RM’000
Balance at 1 October 2019/2018 2,618 - Grants received during the financial year 2,567 2,805 Recognised in profit or loss (166) (187) Balance at 30 September 5,019 2,618
The Group received grants from the Malaysian Investment Development Authority (“MIDA”) for modernisation and upgrading of its existing manufacturing activities. The grants covered 50% of the costs of the assets subject to the limits approved. 87 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
17. PAYABLES
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Trade payables 9,493 10,493 - -
Other payables:- - Subsidiaries - - 2,232 3,099 - Director - 1 - - - Unrelated parties 51,036 20,485 784 709 51,036 20,486 3,016 3,808 60,529 30,979 3,016 3,808
The currency profile of trade and other payables is as follows:-
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Ringgit Malaysia 22,092 25,044 3,016 3,808 Thai Baht 2,475 3,970 - - United States Dollar 35,399 1,402 - - Others 563 563 - - 60,529 30,979 3,016 3,808
Trade and other payables are generally short-term in nature or repayable on demand and their carrying amounts will approximate to the remaining contractual undiscounted cash flows.
Trade Payables
Trade payables are unsecured, non-interest bearing and generally on 30 to 90 day terms.
Other Payables
Other payables are unsecured and non-interest bearing. The amount owing to subsidiaries is repayable on demand. The amounts owing to unrelated parties mainly consist of sundry payables for acquisition of plant and equipment, and accruals for operating expenses which are generally due within 30 to 90 days. 88 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
18. REVENUE
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Revenue from contracts with customers:-
Sale of goods 242,747 237,687 - - Rendering of services - - 6,240 6,240 242,747 237,687 6,240 6,240
Other sources of revenue:- Dividend income - - 4,000 40,000 242,747 237,687 10,240 46,240
The other information on the disaggregation of revenue is disclosed in Note 26. Information about disaggregation of revenue from contracts with customers of the Company has not been disclosed as the Company derives the revenue mainly from rendering management services to subsidiaries in Malaysia.
19. PROFIT BEFORE TAX
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Profit before tax is arrived at after charging (crediting):-
Auditors’ remuneration:- - Audit fee:- - Crowe Malaysia PLT 277 222 63 63 - Other auditors 26 23 - - - Non-audit fee:- - Crowe Malaysia PLT 52 - 48 - - Member firms of Crowe Malaysia PLT 61 77 6 12 Bad debts written off 4 24 - - Depreciation of property, plant and equipment 27,958 28,665 - 55 Depreciation of right-of-use assets 3,293 - - - Personnel expenses (Note 20) 75,333 67,205 9,143 6,546 Impairment loss on receivables 774 - 500 - Impairment loss on plant and equipment 72 524 - - Interest expense for lease liabilities 2,499 - - - Interest expense for financial liabilities not at fair value through profit or loss 1,830 4,600 - - Inventories written down 1,771 2,402 - - Loss on foreign exchange: - Realised 55 335 - - - Unrealised - 557 - - 89 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
19. PROFIT BEFORE TAX (CONT’D)
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Profit before tax is arrived at after charging/(crediting):- (Cont’d)
Loss/(Gain) on fair value adjustment of intangible assets 430 (46) - - Plant and equipment written off 109 239 - - Rental expenses 819 1,774 - - Retirement benefits 120 208 - - Amortisation of deferred income on government grants (166) (187) - - Dividend income from subsidiaries - - (4,000) (40,000) Gain on disposal of plant and equipment (550) (464) - - Gain on disposal of right-of-use assets (5) - - - Gain on foreign exchange: - Realised (5,686) (5,423) - - - Unrealised (36) (19) - - Insurance claims (12,217) (10,378) - - Interest income for financial assets not at fair value through profit or loss (1,267) (2,243) (1,123) (1,962) Reversal of impairment loss on plant and equipment (6,951) (1,408) - - Reversal of inventories written down (4,474) (1,136) - -
20. PERSONNEL EXPENSES (INCLUDING DIRECTORS’ REMUNERATION)
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Executive directors:- - Short-term employees’ benefits 5,027 4,840 5,027 4,840 - Defined contribution plan 570 583 570 583 - Share-based payments 1,864 - 1,864 - 7,461 5,423 7,461 5,423
Non-executive directors:- - Short-term employees’ benefits 311 288 311 288 - Share-based payments 466 - 466 - 777 288 777 288 Balance carried forward 8,238 5,711 8,238 5,711 90 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
20. PERSONNEL EXPENSES (INCLUDING DIRECTORS’ REMUNERATION) (CONT’D)
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Balance brought forward 8,238 5,711 8,238 5,711
Other employees:- - Short-term employees’ benefits 61,337 59,015 661 752 - Defined contribution plan 2,156 2,321 82 83 - Defined benefits plan - 158 - - - Share-based payments 3,602 - 162 - 67,095 61,494 905 835 75,333 67,205 9,143 6,546
21. TAX EXPENSE
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Tax based on results for the year:- - Current tax 1,342 1,507 - - - Deferred tax 865 1,595 - - 2,207 3,102 - -
Tax under/(over) provided in prior year:- - Current tax 2,652 (35) 18 8 - Deferred tax (4,342) 3,480 - - 517 6,547 18 8 91 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
21. TAX EXPENSE (CONT’D)
The numerical reconciliation between the applicable tax rate, which is the statutory income tax rate, and the average effective tax rate on results for the year is as follows:-
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Profit before tax 6,840 14,090 835 41,020
Tax at the statutory tax rate of 24% 1,642 3,382 200 9,845 Non-deductible expenses 4,036 2,708 1,008 208 Non-taxable income (2,106) (3,657) (1,208) (10,053) Increase in unrecognised deferred tax assets 310 989 - - Utilisation of deferred tax assets not recognised in prior years (1,675) (320) - - Tax under/(over) provided in prior year:- - Current tax 2,652 (35) 18 8 - Deferred tax (4,342) 3,480 - - 517 6,547 18 8
The future availability of deductible temporary differences and unutilised tax credits for which no deferred tax assets have been recognised are as follows:-
Group 2020 2019 RM’000 RM’000
Property, plant and equipment 1,522 9,538 Unabsorbed capital allowances 9,413 7,782 Unutilised tax losses 7,011 6,302 Others 60 72 18,006 23,694
Under the Malaysia Finance Act 2018 which was gazetted on 27 December 2018, the Group’s unutilised tax losses are imposed with a time limit of utilisation. Any accumulated unutilised tax losses brought forward from year of assessment 2019 can only be carried forward for another 7 consecutive years of assessment (i.e. from year of assessments 2020 to 2026). The unabsorbed capital allowances are allowed to be carried forward indefinitely. 92 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
22. EARNINGS PER SHARE
The earnings per share is calculated by dividing the Group’s profit for the financial year by the weighted average number of ordinary shares in issue during the financial year as follows:-
Group 2020 2019 (Restated)
Profit for the financial year (RM’000) 6,323 7,543
Number of shares in issue at 1 October 2019/2018 (‘000) 333,176 332,823 Effect of shares issued pursuant to ESOS and Warrants (‘000) 3,865 332 Effect of bonus issue* (‘000) 167,703 166,578
Weighted average number of shares for computing basic earnings per share (‘000) 504,744 499,733 Number of shares under ESOS and Warrants deemed to have been issued for no consideration (‘000) 17,260 2,921
Weighted average number of shares for computing diluted earnings per share (‘000) 522,004 502,654
Basic earnings per share (sen) 1.25 1.51
Diluted earnings per share (sen) 1.21 1.50
* The calculation of basic and diluted earnings per share for the previous financial year has been adjusted retrospectively to reflect the changes in the number of shares as a result of the bonus issue.
23. DIVIDENDS
Group and Company 2020 2019 RM’000 RM’000
Interim single tier tax-exempt dividend of 1 sen per ordinary share in respect of the financial year ended 30 September 2019 3,357 -
Interim single tier tax-exempt dividend of 1 sen per ordinary share in respect of the financial year ended 30 September 2018 - 3,331 93 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
24. NOTES TO THE STATEMENTS OF CASH FLOWS
Group 2020 2019 RM’000 RM’000
Purchase of Property, Plant and Equipment
Cost of property, plant and equipment purchased 32,429 73,339 Amount financed through hire purchase - (31,018) Net cash disbursed 32,429 42,321
Acquisition of Right-of-use Assets
Cost of right-of-use assets acquired 4,089 - Acquisition by means of leases (3,507) - Net cash disbursed 582 -
Banker Acceptances
Balance at 1 October 2019/2018 - 8,576 Net cash flow changes - (8,576) Balance at 30 September - -
Lease Liabilities
Balance at 1 October 2019/2018 - Brought forward from preceding year - - - Effect of adopting MRFS 16 37,594 - - Adjusted 37,594 - Additions 9,045 - Repayments (9,593) - Balance at 30 September (Note 13) 37,046 -
Hire Purchase Payables
Balance at 1 October 2019/2018 - Brought forward from preceding year 35,640 11,857 - Effect of adopting MRFS 16 (35,640) 31,018 - Adjusted - 42,875 Repayments - (7,235) Balance at 30 September (Note 12) - 35,640
Term Loans
Balance at 1 October 2019/2018 30,314 23,478 Drawdowns - 12,777 Repayments (3,093) (5,941) Balance at 30 September (Note 12) 27,221 30,314 94 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
25. RELATED PARTY DISCLOSURES
Significant transactions with related parties during the financial year are as follows:-
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Other key management personnel compensation:- - Short-term employee benefits 2,627 3,077 321 331 - Defined contribution plan 232 221 41 41 - Share-based payments 453 - 69 - 3,312 3,298 431 372 Dividends received from subsidiaries - - 4,000 40,000 Management fee charged to subsidiaries - - 6,240 6,240 Rental expense charged by a director 60 60 - -
26. SEGMENT REPORTING
Operating Segments
For management purposes, the Group is organised into business units based on their products and services and has the following reportable operating segments:-
(i) Precision Engineering: Manufacture of high volume precision components and tools including design, other related activities and incidental services.
(ii) Personal Protective Equipment: Manufacture of personal protective equipment and medical related materials, components, devices or products and other related activities.
The accounting policies and measurement bases of the segment items reported are the same as those disclosed in Note 2. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with external parties. 95 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
26. SEGMENT REPORTING (CONT’D)
Operating Segments (Cont’d)
Personal Precision Protective Engineering Equipment Total 2020 RM’000 RM’000 RM’000
Revenue
External revenue 239,143 3,604 242,747
Represented by:-
Revenue recognised at a point of time - Sale of goods 239,143 3,604 242,747
Results
Segment profit 5,220 1,103 6,323
Segment profit includes the following:-
Amortisation of deferred income on government grants (166) - (166) Bad debts written off 4 - 4 Depreciation of property, plant and equipment 27,585 373 27,958 Depreciation of right-of-use assets 3,293 - 3,293 Loss on fair value adjustment of intangible assets 430 - 430 Gain on disposal of plant and equipment (550) - (550) Gain on disposal of right-of-use assets (5) - (5) Impairment loss on plant and equipment 72 - 72 Impairment loss on receivables 774 - 774 Retirement benefits 120 - 120 Insurance claims (12,217) - (12,217) Interest expense 4,329 - 4,329 Interest income (1,267) - (1,267) Inventories written down 1,771 - 1,771 Personnel expenses 75,189 144 75,333 Plant and equipment written off 109 - 109 Realised gain on foreign exchange (5,686) - (5,686) Reversal of impairment loss on plant and equipment (6,951) - (6,951) Reversal of inventories written down (4,474) - (4,474) Unrealised gain on foreign exchange (36) - (36) 96 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
26. SEGMENT REPORTING (CONT’D)
Operating Segments (Cont’d)
Personal Precision Protective Engineering Equipment Total 2020 RM’000 RM’000 RM’000
Assets
Segment assets 550,296 16,409 566,705
Additions to non-current assets other than financial instruments:- Property, plant and equipment 19,798 12,631 32,429 Right-of-use assets 4,089 - 4,089 Intangible assets 3,152 - 3,152
Liabilities
Segment liabilities 138,975 456 139,431
The comparative information is not presented as the Group’s revenue, profit or loss, assets and liabilities are mainly confined to a single operating segment, namely the Precision Engineering.
Geographical Information
In presenting information about geographical areas, segment revenue is based on the geographical location of customers whereas segment assets are based on the geographical location of assets.
Group Group External Revenue Non-Current Assets 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Belgium 5,951 5,313 - - China 11,453 13,958 - - Hong Kong 2,224 1,735 - - Japan 5,516 5,919 - - Malaysia 63,285 42,031 283,662 266,065 Mexico 7,633 8,126 - - Poland 23,825 30,948 - - Thailand 97,021 100,143 60,085 67,253 United States of America 21,196 24,831 - - Others 4,643 4,683 - - 242,747 237,687 343,747 333,318 97 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
26. SEGMENT REPORTING (CONT’D)
Major Customers
The major customers that contributed 10% or more of the Group’s total revenue are as follows:-
Group External Revenue 2020 2019 RM’000 RM’000
Customer I(a) 47,590 42,801 Customer II(a) 34,706 40,025
(a) The identity of the major customer has not been disclosed as permitted by MFRS 8 Operating Segments.
27. COMMITMENT FOR PURCHASE OF PROPERTY, PLANT AND EQUIPMENT
Group 2020 2019 RM’000 RM’000
Contracted but not provided for 2,364 3,784
28. FINANCIAL GUARANTEE CONTRACTS
The Company has entered into financial guarantee contracts to provide financial guarantees to financial institutions for credit facilities granted to certain subsidiaries up to a total limit of approximately RM196,966,500 (2019 - RM78,300,000). The total utilisation of these credit facilities as at 30 September 2020 amounted to approximately RM62,434,014 (2019 - RM12,502,712). No maturity analysis is presented for the financial guarantee contracts as the entire amount could be called at any time in the event of default by the subsidiaries.
The aforementioned financial guarantee contracts should have been recognised in the statements of financial position in accordance with the recognition and measurement policies as stated in Note 2.9. All of the financial guarantee contracts are considered to be performing, have low risks of default and historically there were no instances where these financial guarantee contracts were called upon by the parties of which the financial guarantee contracts were issued to. Accordingly, no loss allowances were identified based on 12-month expected credit losses. The financial guarantee contracts have not been recognised as the fair values on initial recognition are not expected to be material. 98 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
29. FINANCIAL RISK MANAGEMENT
The activities of the Group expose it to certain financial risks, including credit risk, liquidity risk, currency risk and interest rate risk. The overall financial risk management objective of the Group is to ensure that adequate financial resources are available for business development whilst minimising the potential adverse impacts of financial risks on its financial position, performance and cash flows.
The aforementioned financial risk management objective and its related policies and processes explained below have remained unchanged from the previous financial year.
Credit Risk
The Group’s exposure to credit risk arises mainly from receivables and deposits placed with financial institutions. The maximum credit risk exposure of these financial assets is best represented by their respective carrying amounts in the statements of financial position. The Company is also exposed to credit risk in respect of its financial guarantees provided for credit facilities granted to certain subsidiaries. The maximum credit risk exposure of these financial guarantees is the total utilisation of the credit facilities granted as disclosed in Note 28.
The Group manages its credit risk exposure of receivables by assessing counterparties’ financial standings on an ongoing basis, setting and monitoring counterparties’ limits and credit terms. The quantitative information about such credit risk exposure is disclosed in Note 9. As the Group only deals with reputable financial institutions, the credit risk associated with deposits placed with them is low.
Liquidity Risk
The Group’s exposure to liquidity risk relates to its ability to meet obligations associated with financial liabilities as and when they fall due. The remaining contractual maturities of financial liabilities are disclosed in their respective notes.
In addition, the Company’s liquidity risk exposure resulting from the financial guarantee contracts is disclosed in Note 28, representing the total utilisation of the credit facilities by its subsidiaries as at the end of the reporting period.
The Group practises prudent liquidity risk management to minimise the mismatch of financial assets and liabilities whilst maintaining sufficient cash and the availability of funding through standby credit facilities.
Currency Risk
The Group’s exposure to currency risk arises mainly from transactions entered into in currencies other than its functional currencies, i.e. Ringgit Malaysia (“RM”) and Thai Baht (“THB”). The major foreign currencies transacted are Euro (“EUR”), Japanese Yen (“JPY”) and United States Dollar (“USD”), and the gross carrying amounts of foreign currency denominated monetary items at the end of the reporting period are receivables (Note 9), cash and cash equivalents (Note 10) and payables (Note 17).
The Group observes the movements in exchange rates and acts accordingly to minimise its exposure to currency risk. Where necessary, the Group enters into derivative contracts to hedge the exposure. Such exposure is also partly mitigated in the following ways:-
(i) The Group’s foreign currency sales and purchases provide a natural hedge against fluctuations in foreign currencies.
(ii) The Group maintains part of its cash and cash equivalents in foreign currency accounts to meet future obligations in foreign currencies.
99 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
29. FINANCIAL RISK MANAGEMENT (CONT’D)
Currency Risk (Cont’d)
Based on a symmetric basis which uses the foreign currency as a stable denominator, the following table demonstrates the sensitivity of profit or loss (and equity) to changes in exchange rates that were reasonably possible at the end of the reporting period, with all other variables held constant:-
Group Increase/ Increase/ (Decrease) (Decrease) in Profit in Profit 2020 2019 RM’000 RM’000
Appreciation of EUR against RM by 10% 1,374 1,304 Depreciation of EUR against RM by 10% (1,374) (1,304) Appreciation of USD against RM by 10% 4,454 1,953 Depreciation of USD against RM by 10% (4,454) (1,953)
Interest Rate Risk
The Group’s exposure to interest rate risk arises mainly from interest-bearing financial instruments, namely term deposits, loans and borrowings and lease liabilities.
The Group observes the movements in interest rates and always strives to obtain the most favourable rates available for new financing or during repricing. It is also the Group’s practice to maintain a mix of fixed and floating rate financial instruments.
As the Group does not account for its fixed rate financial instruments at fair value through profit or loss, any change in interest rates at the end of the reporting period would not affect its profit or loss (and equity). For floating rate financial instruments measured at amortised cost, the following table demonstrates the sensitivity of profit or loss (and equity) to changes in interest rates that were reasonably possible at the end of the reporting period, with all other variables held constant:-
Group Increase/ Increase/ (Decrease) (Decrease) in Profit in Profit 2020 2019 RM’000 RM’000
Increase in interest rates by 100 basis points (207) (230) Decrease in interest rates by 100 basis points 207 230 100 NOTION VTEC BERHAD
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
30. CAPITAL MANAGEMENT
The overall capital management objective of the Group is to safeguard its ability to continue as a going concern so as to provide fair returns to owners and benefits to other stakeholders. In order to meet this objective, the Group always strives to maintain an optimal capital structure to reduce the cost of capital and sustain its business development.
The Group considers its total equity and total loans and borrowings to be the key components of its capital structure and may, from time to time, adjust the dividend payouts, purchase own shares, issue new shares, sell assets, raise or redeem debts, where necessary, to maintain an optimal capital structure.
The Group monitors capital using a debt-to-equity ratio, which is calculated as total loans and borrowings divided by total equity as follows:-
The aforementioned capital management objective, policies and processes have remained unchanged from the previous financial year.
Group 2020 2019 RM’000 RM’000
Loans and borrowings 27,221 65,954 Lease liabilities 37,046 - Total interest-bearing debts 64,267 65,954 Total equity 427,274 416,005 Total capital 491,541 481,959
Debt-to-equity ratio 0.15 0.16
31. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
(i) The World Health Organisation declared the novel coronavirus (“COVID-19”) a global pandemic on 11 March 2020. The Government of Malaysia imposed the Movement Control Order (“MCO”) on 18 March 2020 to 12 May 2020 and had subsequently entered into the conditional and recovery phases of the MCO until 20 December 2020 in all states and federal territories in Malaysia. On 11 January 2021, the Government of Malaysia announced a second round of MCO on several states within Malaysia with effect from 13 January 2021.
The Group’s performance was affected when the Movement Control Order was imposed by the Malaysian Government in March 2020, during which time the production was temporarily suspended and upon resuming operations in April 2020, the Group was only allowed to operate at 50% capacity. The Group was also affected by supply chain disruption and logistics challenges due to border restrictions. Overall revenue generated during the individual quarter ended 30 June 2020 fell by more than 30% compared with the preceding quarter.
As at the date of authorisation of the financial statements, the COVID-19 pandemic situation is still evolving and remain uncertain. The Group will continue to actively monitor and manage its funds and operations to minimise any impact arising from the COVID-19 pandemic. Nevertheless, with the Group’s past focus on cost efficiency, strong cash position, resilient fundamentals and diversification into healthcare segments, the Group expects to sustain its operational and financial performance for the financial year ending 30 September 2021. 101 ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 30 September 2020
31. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONT’D)
(ii) On 1 July 2020, the Group has ceased to develop and provide validation services in blockchain technology due to losses sustained as a result of high cost of electricity versus the economic return shortfall arising from higher algorithmic hash and increased difficulty rates.
(iii) On 15 September 2020, the Group and the Company have entered into an Investment Agreement (“IA”) with Blinkware Technology Sdn. Bhd. (“Blinkware”), a company in which a director of the Group and the Company have substantial financial interests for granting a total investment fund of RM1,000,000 to Blinkware to produce two artificial intelligence products. However, the investment was not completed during the financial year due to certain pending fulfillment of terms and conditions of the IA and the uncertainties of the economic return arising from the commercialization potential of these products.
32. SIGNIFICANT EVENT OCCURRING AFTER THE REPORTING
On 11 January 2021, the shareholders of the Company have approved the diversification of the existing business of the Group to include the production and trading of gloves by a resolution passed at the Extraordinary General Meeting. 102 NOTION VTEC BERHAD
LIST OF PROPERTIES Held as at 30 September 2020
Approximate Age of Date of Net Book Building Acquisition / Land Area Value Location (years) Completion (sq ft) Tenure (RM) 1 1/2 Storey Semi-Detached Light Industrial Factory 16 26 February 7,653 Freehold 455,200 held under HS(M) No.22229, PT No.27966, Mukim 2004 Kapar, Daerah Klang Address: No.11, Jalan Teruntum 20 KU/08, Jalan Teratai, Batu 5 1/2, Jalan Meru, 41050 Klang 1 1/2 Storey Semi-Detached Light Industrial Factory 16 26 February 7,653 Freehold 455,200 held under HS(M) No.22230, PT No.27967, Mukim 2004 Kapar, Daerah Klang Address: No.11A, Jalan Teruntum 20 KU/08, Jalan Teratai, Batu 5 1/2, Jalan Meru, 41050 Klang 3 Storey Office Building with Factory Building held 15 10 August 304,988 Freehold 54,032,150 under HS(D)No.13321, PT No.371 & HS(D) No.22781, 2006 PT No.10649, Mukim Kapar, Daerah Klang Address: Lot 6123, Jalan Haji Salleh, Batu 5 1/2, Jalan Meru, 41050 Klang, Selangor Factory Buildings under the land title deed no.9845, 23 02 October 262,937 Freehold 17,973,484 Lot No.112, Survey Page No.623, Khan Ham Sub 2009 District, U Thai District, Ayutthaya Province, Thailand Address: No.1/48, Rojana Industrial Park Moo 5, Tambol Kanham, Amphur U-Thai. Pranakorn Sri Ayutthaya, 13210, Thailand 1 1/2 Storey light industrial factory held under HS(M) 24 28 January 1,959 Freehold 172,444 19366, PT24011, Mukim Kapar, Daerah Klang 2010 Address: No.31, Jalan Keledang 9, Off Jalan Meru, 41050 Klang, Selangor 1 1/2 Storey light industrial factory held under HS(M) 24 28 January 1,970 Freehold 172,444 19373, PT24018, Mukim Kapar, Daerah Klang 2010 Address: No.45, Jalan Keledang 9, Off Jalan Meru, 41050 Klang, Selangor 1 1/2 Storey light industrial factory held under HS(M) 24 28 January 1,970 Freehold 172,445 19374, PT24019, Mukim Kapar, Daerah Klang 2010 Address: No.47, Jalan Keledang 9, Off Jalan Meru, 41050 Klang, Selangor 103 ANNUAL REPORT 2020
LIST OF PROPERTIES (CONT’D) Held as at 30 September 2020
Approximate Age of Date of Net Book Building Acquisition / Land Area Value Location (years) Completion (sq ft) Tenure (RM) 1 1/2 Storey light industrial factory held under HS(M) 24 28 January 1,970 Freehold 172,445 19375, PT24020, Mukim Kapar, Daerah Klang 2010 Address: No.49, Jalan Keledang 9, Off Jalan Meru, 41050 Klang, Selangor 1 1/2 Storey light industrial factory held under HS(M) 24 28 January 3,197 Freehold 344,889 19376, PT24021, Mukim Kapar, Daerah Klang 2010 Address: No.51, Jalan Keledang 9, Off Jalan Meru, 41050 Klang, Selangor 2 Storey Office Building with Factory building held 24 29 April 2010 108,931 Freehold 3,593,700 under HS(D)No.22776 PT No.10644, Mukim Kapar, Daerah Klang Address: Lot 6123, Jalan Haji Salleh, Batu 5 1/2, Jalan Meru, 41050 Klang, Selangor 1 1/2 Storey light industrial factory held under HS(M) 24 08 February 1,970 Freehold 203,678 19372, PT24017, Mukim Kapar, Daerah Klang 2012 Address: No.43 Jalan Keledang 9, Off Jalan Meru, 41050 Klang, Selangor 1 Storey Factory with a 2 Storey Office held under 28 13 March 2012 283,952 Freehold 17,035,723 HS(D) No.135933, PT No.52829, Mukim Kapar, Daerah Klang Address: Lot 6071, Jalan Haji Manan, Batu 5 1/2, Off Jalan Meru, 41050 Klang, Selangor 1 Storey Linked Terrace Industrial Lot held under 13 08 October 3,337 Freehold 174,258 Geran 92792, Mukim Kapar, Daerah Klang 2012 Address: Lot 35141, Jalan Haji Manan, Batu 5 1/2, Off Jalan Meru, 41050 Klang, Selangor 1 Storey Linked Terrace Industrial Lot held under 13 08 October 3,337 Freehold 174,258 Geran 92798, Mukim Kapar, Daerah Klang 2012 Address: Lot 35147, Jalan Haji Manan, Batu 5 1/2, Off Jalan Meru, 41050 Klang, Selangor 104 NOTION VTEC BERHAD
LIST OF PROPERTIES (CONT’D) Held as at 30 September 2020
Approximate Age of Date of Net Book Building Acquisition / Land Area Value Location (years) Completion (sq ft) Tenure (RM) 1 Storey Linked Terrace Industrial Lot held under 13 08 October 3,337 Freehold 174,258 Geran 92800, Mukim Kapar, Daerah Klang 2012 Address: Lot 35149, Jalan Haji Manan, Batu 5 1/2, Off Jalan Meru, 41050 Klang, Selangor 1 Storey Linked Terrace Industrial Lot held under 13 08 October 3,337 Freehold 174,258 Geran 92801, Mukim Kapar, Daerah Klang 2012 Address: Lot 35150, Jalan Haji Manan, Batu 5 1/2, Off Jalan Meru, 41050 Klang, Selangor 1 Storey Industrial Lot, Sri Ayutthaya, Thailand 26 11 August 92,311 Freehold 3,585,313 2016 Address: 63 Tambon Thanu, Amphur Uthai, Pra Nakhon Sri Ayutthaya Province, Thailand 2 Storey Industrial Lot, Sri Ayutthaya, Thailand 13 03 May 2018 163,439 Freehold 9,753,449 Address: 40 Moo 4 Tambon U-Thai, Amphur Uthai, Pra Nakhon Sri Ayutthaya Province, Thailand 1 plot of Industrial Land, Johor Bahru 6 28 February 136,583 Freehold 11,572,565 2018 Address: Plot 4, HSD 547617, PTD 200311, Mukim Pulai, Johor Bahru 2 Storey Industrial Lot 3 30 July 2018 41,591 Freehold 6,624,789 Address: No. 2, Jalan Haji Manan 3/KU8 Kawasan Perindustrian Meru Barat 41050 Klang, Selangor TOTAL 127,016,950 105 ANNUAL REPORT 2020
ANALYSIS OF SHAREHOLDINGS As at 31 December 2020
SHAREHOLDINGS
Issued Shares : 515,043,586 ordinary shares Class of Shares : Ordinary shares Voting Rights : Every member of the Company, present in person and entitled to vote, or by proxy or by attorney or other duly authorised representative, shall have on a show of hands, one (1) vote or on a poll, one (1) vote for each ordinary share held Number of shareholders : 20,334
ANALYSIS BY SIZE OF HOLDINGS
No. of No. of Size of Holdings Holders % Shares % 1 – 99 1,058 5.203 48,278 0.009 100 - 1,000 3,154 15.511 2,082,933 0.404 1,001 - 10,000 10,798 53.103 54,772,080 10.635 10,001 - 100,000 4,845 23.827 144,972,832 28.148 100,001 - 25,752,178 (*) 477 2.346 251,254,758 48.783 25,752,179 and above (**) 2 0.010 61,912,705 12.021 TOTAL 20,334 100.000 515,043,586 100.000
Remark : * - Less than 5% of issued shares ** - 5% and above of issued shares
DIRECTORS’ SHAREHOLDINGS ACCORDING TO THE REGISTER OF DIRECTORS’ SHAREHOLDINGS AS AT 31 DECEMBER 2020
No. Name Holdings % 1 THOO CHOW FAH 19,871,301 3.859 2 CHOO WING HONG 52,582,939 10.209 3 CHOO WING ONN 42,521,766 8.256 4 LEE TIAN YOKE 17,976,446 3.490 5 CHOO WING YEW 13,649,887 2.650 6 SAW TAT LOON 450,000 0.087 7 ANITA CHEW CHENG IM 450,000 0.087 8 DATO’ ABU BAKAR BIN MOHD NOR 41, 689 0.008 TOTAL 147,544,028 28.646
SUBSTANTIAL SHAREHOLDERS
No. Name Holdings % 1 CHOO WING HONG 52,582,939 10.029 2 CHOO WING ONN 42,521,766 8.256 TOTAL 95,104,705 18.285 106 NOTION VTEC BERHAD
ANALYSIS OF SHAREHOLDINGS (CONT’D) As at 31 December 2020
LIST OF TOP 30 SHAREHOLDERS
No. Name Holdings % 1 CHOO WING HONG 31,582,939 6.132 2 CHOO WING ONN 30,329,766 5.888 3 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 18,000,000 3.494 PLEDGED SECURITIES ACCOUNT FOR CHOO WING HONG 4 LEE TIAN YOKE 17,976,446 3.490 5 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 12,192,000 2.367 PLEDGED SECURITIES ACCOUNT FOR CHOO WING ONN 6 TAN PAU SON 11,249,300 2,184 7 RHB NOMINEES (TEMPATAN) SDN BHD 8,250,000 1.601 PLEDGED SECURITIES ACCOUNT FOR THOO CHOW FAH 8 RHB NOMINEES (TEMPATAN) SDN BHD 5,917,800 1.148 PLEDGED SECURITIES ACCOUNT FOR CHOO WING YEW 9 MAYBANK NOMINEES (TEMPATAN) SDN BHD 5,850,000 1.135 PLEDGED SECURITIES ACCOUNT FOR THOO CHOW FAH 10 THOO CHOW FAH 5,771,301 1.120 11 CHOO WING LEONG 5,725,575 1.111 12 CHOO WING YEW 4.500.000 0.873 13 CHOO WING YEW 3,232,087 0.627 14 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 3,000,000 0.582 PLEDGED SECURITIES ACCOUNT FOR CHOO WING HONG 15 CHOO WING KIN 2,929,550 0.568 16 HUANG TIONG SII 2,651,000 0.514 17 THO SIEW WAH 2,630,000 0.510 18 ENG HONG PALM OIL MILL SDN BERHAD 2,336,000 0.453 19 TAN SOOK WANG 2,300,165 0.446 20 CGS-CIMB NOMINEES (ASING) SDN BHD 2,280,000 0.442 EXEMPT AN FOR CGS-CIMB SECURITIES (SINGAPORE) PTE. LTD. (HOUSE ACCOUNT) 21 KU NEE KHER @ CHEW FA 2,120,000 0.411 22 YUEN THUI YANG 2,102,563 0.408 23 HLIB NOMINEES (TEMPATAN) SDN BHD 2,006,000 0.389 HONG LEONG BANK BHD FOR SAW HEAN YEOW 24 CHONG MOO LING 1,930,200 0.374 25 TAN LAI HUAN 1,778,000 0.345 26 CHOO WAI SOOK 1,582,962 0.307 27 KENANGA NOMINEES (TEMPATAN) SDN BHD 1,560,000 0.302 PLEDGED SECURITIES ACCOUNT FOR WONG SENG CHAN (009) 28 PUBLIC INVEST NOMINEES (TEMPATAN) SDN BHD 1,550,000 0.300 PLEDGED SECURITIES ACCOUNT FOR CHONG MOO LING (M) 29 MAYBANK NOMINEES (TEMPATAN) SDN BHD 1,465,800 0.284 PLEDGED SECURITIES ACCOUNT FOR SU MING KEAT 30 TA NOMINEES (TEMPATAN) SDN BHD 1,440,000 0.279 PLEDGED SECURITIES ACCOUNT FOR LEONG SIEW MOOI TOTAL 196,239,454 38.101 107 ANNUAL REPORT 2020
ANALYSIS OF WARRANT HOLDINGS As at 31 December 2020
WARRANTS-C HOLDINGS
No. of warrants C in issue : 49,588,723 Exercise price of the warrants C : RM0.56 Issue date of the warrants C : 14 March 2018 Expiry date of the warrants C : 14 March 2023
ANALYSIS BY SIZE OF WARRANT HOLDINGS
No. of No. of Size of Holdings Holders % Warrants % 1 – 99 1,444 28.868 32,845 0.066 100 - 1,000 1,063 21.251 501,639 1.012 1,001 - 10,000 1,690 33.786 7,759,745 15.648 10,001 - 100,000 732 14.634 22,214,509 44.798 100,001 - 2,479,435 (*) 73 1.459 19,079,985 38.476 2,479,436 and above (**) 0 0.000 0 0.000 Total: 5,002 100.000 49,588,723 100.000
Remark : * - Less than 5% of issued warrants ** - 5% and above of issued warrants
DIRECTORS’ WARRANT HOLDINGS ACCORDING TO THE WARRANT HOLDERS REGISTER AS AT 31 DECEMBER 2020
No. Name Holdings % 1 THOO CHOW FAH - - 2 CHOO WING HONG 1,589,250 3.205 3 CHOO WING ONN - - 4 LEE TIAN YOKE - - 5 CHOO WING YEW 323,208 0.652 6 SAW TAT LOON - - 7 ANITA CHEW CHENG IM - - 8 DATO’ ABU BAKAR BIN MOHD NOR 4,168 0.008 TOTAL 1,916,626 3.865 108 NOTION VTEC BERHAD
ANALYSIS OF WARRANT HOLDINGS (CONT’D) As at 31 December 2020
LIST OF TOP 30 WARRANT HOLDERS
No. Name Holdings % 1 CHOO WING HONG 1,589,250 3.204 2 MAYBANK NOMINEES (TEMPATAN) SDN BHD 867,897 1.750 PLEDGED SECURITIES ACCOUNT FOR TAN YIK KEN @ KENNETH TAN 3 OOI THONG HOCK 620,000 1.250 4 LEOW SOON SENG 500,000 1.008 5 YAP BEE HOONG 500,000 1.008 6 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 499,800 1.007 PLEDGED SECURITIES ACCOUNT FOR JINATA BIN MUHAMAD YUSUP (MARGIN) 7 RHB NOMINEES (TEMPATAN) SDN BHD 487,800 0.983 PLEDGED SECURITIES ACCOUNT FOR TEY JIIN CHYUAN 8 MAYBANK NOMINEES (TEMPATAN) SDN BHD 470,900 0.949 PLEDGED SECURITIES ACCOUNT FOR WONG WAH PENG 9 MAYBANK NOMINEES (TEMPATAN) SDN BHD 461,950 0.931 CHENG AI LENG 10 ROOPAK SINGH A/L RAGHBIR SINGH 420,400 0.847 11 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 400,000 0.806 PLEDGED SECURITIES ACCOUNT FOR KONG KOK CHOY (8092812) 12 LEE SI YAN 400,000 0.806 13 NG KUAN HUA 385,000 0.776 14 PUBLIC NOMINEES (TEMPATAN) SDN BHD 378,700 0.763 PLEDGED SECURITIES ACCOUNT FOR PANG WEI CHUAN (E- BPT) 15 MAYBANK NOMINEES (TEMPATAN) SDN BHD 360,000 0.725 GAN KAH HOOI 16 YONG YEE YIN 350,000 0.705 17 NOOR HASSAN BIN YAHAYA 339,600 0.684 18 CGS-CIMB NOMINEES (TEMPATAN) SDN BHD 336,800 0.679 PLEDGED SECURITIES ACCOUNT FOR PANG FONG THAU (KKINABALU-CL) 19 CHOO WING YEW 323,208 0.651 20 ANG ZHI YI 300,000 0.604 21 KENANGA NOMINEES (TEMPATAN) SDN BHD 300,000 0.604 PLEDGED SECURITIES ACCOUNT FOR ROSMAN BIN SAMURI (033) 22 MAYBANK NOMINEES (TEMPATAN) SDN BHD 259,300 0.522 PLEDGED SECURITIES ACCOUNT FOR AZHAR BIN JEMANI 23 CHIA AUN LING 250,000 0.504 24 PUBLIC NOMINEES (TEMPATAN) SDN BHD 250,000 0.504 PLEDGED SECURITIES ACCOUNT FOR TAN LAY PENG (E-TAI) 25 LAM LEE CHOI @ LIM LEE CHEN 225,000 0.453 26 SIK LOONG SIANG 220,000 0.443 27 CHONG MEE SIN 215,000 0.433 28 TAN KEE HOCK 210,000 0.423 29 ANTHONY DASS A/L ANTHONY SAMY 205,000 0.413 30 CGS-CIMB NOMINEES (TEMPATAN) SDN BHD 204,904 0.413 PLEDGED SECURITIES ACCOUNT FOR LEE SI YAN (PENANG-CL) TOTAL 12,330,509 24.865 109 ANNUAL REPORT 2020
ADDITIONAL COMPLIANCE
DIRECTORS’ RESPONSIBILITY STATEMENT
The directors are responsible for ensuring that the financial statements of the Group are drawn up in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act 2016 so as to give a true and fair view of the state of affairs of the Group and the Company as at 30 September 2020 and the results and cashflows of the Group and the Company for the financial year ended on that date.
In preparing the financial statements, the Directors have:
(a) Adopted suitable accounting policies and applied them consistently;
(b) Made judgements and estimates that are reasonable and prudent;
(c) Ensured the adoption of applicable approved accounting standards; and
(d) Used the going concern basis for the preparation of the financial statements.
The Directors are responsible for ensuring proper accounting records which disclose with reasonable accuracy of the financial position of the Group and Company and are kept in accordance with the Companies Act 2016. The Directors are also responsible for ensuring that a proper internal control is in place to safeguard the Group’s assets and to prevent and detect fraud and other irregularities.
MATERIAL CONTRACTS
There were no material contracts entered into by the Company and its subsidiaries involving the Company’s Directors’ and/or major shareholders’ interests, either still subsisting at the end of the financial year, or which were entered into since the end of the previous financial year.
UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSALS
The Company did not undertake any corporate proposal to raise proceeds during the financial year.
LONG TERM INCENTIVE PLAN (“LTIP”)
The Company had at the Extraordinary General Meeting held on 23 February 2017 obtained its shareholders’ approval to establish the LTIP which comprising the ESOS and ESGS. The LTIP shall be in force for a period of five (5) years from the effective date of 24 February 2017. 110 NOTION VTEC BERHAD
ADDITIONAL COMPLIANCE (CONT’D)
A detailed breakdown of the allocation of the options as at 30 September 2020 is as follows:-
(a) The total number of options granted, exercised and outstanding during the financial year under review:
Number of Options - Exercisable Grand Total Directors As at 1 October 2019 9,444,600 4,600,000 Adjustment arising from Bonus Issue 2,986,600 2,000,000 Granted 21,000,000 8,250,000 Exercised (11,580,798) (3,600,000) As at 30 September 2020 21,850,402 11,250,000
(b) Percentage of options applicable to Directors and Senior Management under the LTIP since the commencement of LTIP up to financial year ended 30 September 2020:
Since the commencement of the LTIP up to financial year ended Directors and Senior Management 30 September 2020 Aggregate maximum allocation 13,250,000 Actual percentage granted 38%
(c) The table below set out the options granted to Non-Executive Directors during the financial year under review:
Adjustment Balance as at As at arising from 30 September Name 1 Oct 2019 Bonus Issue Granted Exercised 2020 Saw Tat Loon 300,000 150,000 450,000 450,000 450,000 Anita Chew Cheng Im 300,000 150,000 450,000 450,000 450,000 Dato’ Abu Bakar Bin Mohd Nor - - 750,000 - 750,000
Pursuant to Paragraph 8.20 of the Listing Requirements, the Non-Executive Directors shall not sell, transfer or assign the new shares obtained through the exercise of the options offered to them within 1 year from the date of offer. 111 ANNUAL REPORT 2020
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Seventeenth (“17th”) Annual General Meeting (“AGM”) of NOTION VTEC BERHAD (“Company”) will be conducted entirely through live streaming from the broadcast venue at Tricor Business Centre, Manuka 2 & 3 Meeting Room, Unit 29-01, Level 29, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur (“Broadcast Venue”) on Wednesday, 3 March 2021 at 9.30 a.m. for the following purposes:
AGENDA
Ordinary Business
1. To receive the Audited Financial Statements for the financial year ended 30 September 2020 together with the Reports of the Directors and Auditors thereon. (Please refer to Note 1 of the Explanatory Notes)
2. To re-elect the following Directors who are retiring in accordance with Clause 95 of the Constitution of the Company:
i) Mr Choo Wing Onn (Ordinary Resolution 1)
ii) Mr Saw Tat Loon (Ordinary Resolution 2)
iii) Ms Anita Chew Cheng Im (Ordinary Resolution 3)
3. To approve the payment of Directors’ Fees of up to RM300,000 (2019: RM300,000) and benefits payable to the Directors of the Company of up to RM50,000 (2019: RM50,000) from 3 March 2021 until the conclusion of the next AGM of the Company. (Ordinary Resolution 4)
4. To re-appoint Crowe Malaysia PLT as Auditors of the Company and to authorise the Directors to fix their remuneration. (Ordinary Resolution 5)
Special Business
To consider and if thought fit, to pass with or without any modification, the following resolutions:
5. Proposed continuation in office of Mr Saw Tat Loon as Independent Non-Executive Director
“THAT subject to passing of Ordinary Resolution 2, the approval be and is hereby given to Mr Saw Tat Loon who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than twelve years, to continue to act as an Independent Non-Executive Director of the Company until the conclusion of the next AGM in accordance with the Malaysian Code on Corporate Governance (“MCCG”).” (Ordinary Resolution 6)
6. Proposed continuation in office of Ms Anita Chew Cheng Im as Independent Non-Executive Director
“THAT subject to passing of Ordinary Resolution 3, the approval be and is hereby given to Ms Anita Chew Cheng Im who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than twelve years, to continue to act as an Independent Non-Executive Director of the Company until the conclusion of the next AGM in accordance with the MCCG.” (Ordinary Resolution 7) 112 NOTION VTEC BERHAD
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
7. Proposed Renewal of Authority for the Company to Purchase its own Ordinary Shares
“THAT subject to the Companies Act 2016 (“the Act”), the provisions of the Company’s Constitution, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authority or approval for the time being in force or as may be amended from time to time, the Directors of the Company be and are hereby authorised to make purchases of the Company’s ordinary shares as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit, necessary and expedient in the interest of the Company, provided that:
(a) the aggregate number of ordinary shares which may be purchased and/or held by the Company shall not exceed ten percent (10%) of the total number of issued shares of the Company at any point in time of the said purchase(s);
(b) the maximum funds to be allocated by the Company for the purpose of purchasing its ordinary shares shall not exceed the total retained profits of the Company; and
(c) the authority conferred by this resolution will commence immediately upon passing of this ordinary resolution and will continue to be in force until:
(i) the conclusion of the next AGM of the Company following the 17th AGM at which the Proposed Renewal of Authority for the Company to Purchase its own Ordinary Shares was passed, at which time the said authority will lapse unless an ordinary resolution is passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or (ii) the expiration of the period within which the next AGM of the Company is required by law to be held; or (iii) revoked or varied by ordinary resolution passed by the shareholders in general meeting,
whichever occurs first, but not so as to prejudice the completion of the purchase(s) by the Company before the aforesaid expiry date and, made in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and/ or any other relevant governmental and/or regulatory authorities (if any).
(d) upon completion of the purchase(s) by the Company of its own ordinary shares, the Directors of the Company be and are hereby authorised to deal with the ordinary shares purchased in their absolute discretion in the following manner:
(i) distribute the shares as share dividends to the shareholders; or (ii) resell the shares or any of the shares on Bursa Malaysia Securities Berhad; or (iii) transfer the shares or any of the shares for the purposes of or under an employees’ shares scheme; or (iv) transfer the shares or any of the shares as purchase consideration; or (v) cancel all the ordinary shares so purchased; and/or (vi) sell, transfer or otherwise use the shares for such other purposes as allowed by the Companies Act 2016.
AND THAT the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement or to effect the purchase(s) of the Company’s own shares with full powers to assent to any condition, modification, revaluation, variation and/or amendment as may be imposed by the relevant authorities and to take all such steps as they may deem necessary or expedient in order to implement, finalise and give full effect in relation thereto.” (Ordinary Resolution 8) 113 ANNUAL REPORT 2020
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
8. Proposed Authority to Allot and Issue Shares pursuant to Section 76 of the Act
“THAT pursuant to Section 76 of the Act, the Directors be and are hereby empowered to allot and issue Shares in the share capital of the Company at any time until the conclusion of the next AGM and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that the aggregate number of shares to be issued does not exceed ten percent (10%) of the total number of issued shares of the Company (excluding treasury shares) at the time of issue, subject always to the Constitution of the Company and approval for the listing of and quotation for the additional Shares so issued on the Bursa Securities and other relevant bodies where such approval is necessary.” (Special Resolution 1)
9. To transact any other business that may be transacted at the 17th AGM of which due notice shall have been given in accordance with the Act and the Constitution of the Company.
By Order of the Board
Tai Yit Chan (SSM PC No. 202008001023) (MAICSA 7009143) Tan Ai Ning (SSM PC No. 202008000067) (MAICSA 7015852)
Company Secretaries
Selangor Darul Ehsan 29 January 2021
Explanatory Notes:
(1) Agenda 1 – To receive the Audited Financial Statements
Agenda item no. 1 is meant for discussion only as the provision of Section 340 of the Act does not require a formal approval of shareholders for the Audited Financial Statements. Hence, this item on the Agenda is not put forward for voting.
(2) Ordinary Resolutions 6 and 7 – Proposed continuation in office of Mr Saw Tat Loon and Ms Anita Chew Cheng Im as Independent Non-Executive Directors
Practice 4.2 of the MCCG provides that shareholders’ approval be sought in the event that the Company intends for an Independent Director who has served in the capacity for more than nine (9) years, to continue to act as Independent Director of the Company.
The Board is recommending to the shareholders for Mr Saw Tat Loon and Ms Anita Chew Cheng Im who have served as Independent Non-Executive Directors of the Company for a cumulative term of sixteen (16) years and thirteen (13) years respectively to continue to act as Independent Non-Executive Directors of the Company.
The Board through the Nomination Committee had assessed and endorsed that Mr Saw Tat Loon and Ms Anita Chew Cheng Im be retained as Independent Non-Executive Directors of the Company as they have continued to display high level of integrity and are objective in their judgement and decision-making in the best interest of the Company, shareholders and stakeholders and are able to express unbiased views without any influence. The detailed justifications are as set out in the Corporate Governance Overview Statement. 114 NOTION VTEC BERHAD
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
(3) Ordinary Resolution 8 – Proposed Renewal of Authority for the Company to Purchase its own Ordinary Shares
The proposed Ordinary Resolution 8, if passed, will empower the Company to purchase and/or hold up to ten percent (10%) of the total number of issued shares of the Company for the time being. This authority, unless revoked or varied by the Company at a general meeting, will expire at the conclusion of the next AGM of the Company or the expiration of the period within which the next AGM is required to be held, whichever occurs first.
For further information on Ordinary Resolution 8, please refer to Statement to Shareholders dated 29 January 2021 accompanying the Annual Report of the Company for the financial year ended 30 September 2020.
(4) Special Resolution 1 – Proposed Authority to Allot and Issue Shares pursuant to Section 76 of the Act
The Company had, during its Sixteenth AGM held on 17 March 2020, obtained its shareholders’ approval for the general mandate for issuance of shares pursuant to Section 76 of the Act. As at the date of this notice, the Company did not issue any shares pursuant to this mandate obtained.
The proposed Special Resolution 1 is a renewal of the general mandate for issuance of shares by the Company under Section 76 of the Act. The mandate, if passed, will empower the Directors from the conclusion of this AGM, to allot and issue up to a maximum of ten percent (10%) of the total number of issued shares of the Company (excluding treasury shares) at the time of issue (other than bonus or rights issue) for such purposes as they consider would be in the best interest of the Company. This would eliminate any delay arising from and cost involved in convening a general meeting to obtain approval of the shareholders for such issuance of shares. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.
This authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares for purpose of funding investment project(s), working capital and/or acquisition. At this juncture, there is no decision to issue new shares. If there should be a decision to issue new shares after the general mandate is sought, the Company will make an announcement in respect thereof.
Notes:
(1) The AGM of the Company will be conducted entirely through live streaming and online remote voting via Remote Participation and Voting (“RPV”) facilities. The Company has appointed Tricor Investor & Issuing House Services Sdn Bhd as the Poll Administrator for the AGM to facilitate the RPV via TIIH Online website at https://tiih.online. The procedures for members to register, participate and vote remotely via the RPV facilities are provided in the Administrative Guide for the AGM.
(2) Please follow the procedures set out in the Administrative Guide for the AGM which is available on the Company’s website at www.notionvtec.com to register, attend, speak (in the form of real time submission of typed texts) and vote (collectively, “participate”) remotely via the RPV facilities.
(3) The Broadcast Venue is strictly for the purpose of complying with Section 327(2) of the Companies Act 2016, which requires the Chairman of the meeting to be present at the main venue. Members/proxies are NOT to be physically present at the Broadcast Venue on the day of the AGM.
(4) Pursuant to Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, voting at the AGM will be conducted by way of poll. Poll Administrator and Independent Scrutineers will be appointed to conduct the polling process and verify the results of the poll respectively.
(5) A member entitled to attend and vote at the AGM may appoint another person as his proxy to attend and vote in his stead. A proxy may but need not be a member of the Company. If the proxy is not a member, he need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies. A proxy appointed to attend and vote at the AGM shall have the same rights as the member to speak at the AGM. 115 ANNUAL REPORT 2020
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
Notes (Cont’d):
(6) A member may appoint up to 2 proxies to attend the AGM. Where a member appoints 2 proxies, the appointment shall not be valid unless the member specifies the proportion of his shareholding to be represented by each proxy. Where a member is an exempt authorised nominee which holds shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”) as defined under the Securities Industry (Central Depositories) Act 1991, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds.
(7) The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised.
(8) The instrument appointing a proxy or the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the office of the Company’s Share Registrar, Tricor Investor & Issuing House Services Sdn Bhd, at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or its Customer Service Centre, at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than 48 hours before the time set for holding the AGM or at any adjournment thereof. Alternatively, the Proxy Form may also be electronically submitted via TIIH Online website at https://tiih.online. Please refer to the Administrative Guide for further information on electronic submission.
(9) For the purpose of determining who shall be entitled to attend the AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available a Record of Depositors as at 23 February 2021 and only members whose names appear on such Record of Depositors shall be entitled to attend, speak and vote at the AGM and entitled to appoint proxy or proxies.
Personal data privacy:
By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/ or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
This page is intentionally left blank. FORM OF PROXY
Registration No. 200301035125 (637546-D) (Incorporated in Malaysia)
No. of Shares held CDS Account No.
I/We, (name of shareholder as per NRIC) NRIC No./Passport No./Company No. of (full address) being a Member(s) of NOTION VTEC BERHAD, hereby appoint (name of proxy as per NRIC) NRIC No. of (full address) or failing him/her, (name of proxy as per NRIC) NRIC No. of (full address) or # the Chairman of the Seventeenth (“17th”) Annual General Meeting (“AGM”) as *my/our proxy to vote for *me/us on *my/our behalf at the 17th AGM of the Company to be conducted fully virtual at the broadcast venue at Tricor Business Centre, Manuka 2 & 3 Meeting Room, Unit 29-01, Level 29, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, on Wednesday, 3 March 2021 at 9.30 a.m. or at any adjournment thereof and to vote as indicated below:-
Resolutions For Against 1 To re-elect Mr Choo Wing Onn as Director. Ordinary Resolution 1 2 To re-elect Mr Saw Tat Loon as Director. Ordinary Resolution 2 3 To re-elect Ms Anita Chew Cheng Im as Director. Ordinary Resolution 3 4 To approve the payment of Directors’ Fees and benefits payable to the Directors Ordinary Resolution 4 of the Company from 3 March 2021 until the conclusion of the next AGM of the Company. 5 To re-appoint Crowe Malaysia PLT as auditors of the Company. Ordinary Resolution 5 6 To approve Mr Saw Tat Loon to continue in office as an Independent Non- Ordinary Resolution 6 Executive Director. 7 To approve Ms Anita Chew Cheng Im to continue in office as an Independent Ordinary Resolution 7 Non-Executive Director. 8 To approve the proposed renewal of authority for the Company to Purchase Ordinary Resolution 8 its own Ordinary Shares. 9 To approve the proposed authority to allot and issue shares pursuant to Section Special Resolution 1 76 of the Companies Act 2016. Mark either box if you wish to direct the proxy how to vote. If you do not do so, the proxy may vote on the resolution or abstain from voting as the proxy thinks fit. If you appoint two proxies or more and wish them to vote differently, this should be specified.
For appointment of two proxies, proportion of shareholdings to be represented by the proxies:
No. of shares Percentage (%) Proxy 1 Proxy 2 Total:
# If you wish to appoint other person(s) to be your proxy/proxies, kindly strike Signature of Shareholder or Common Seal out the words “The Chairman of the Seventeenth (“17th”) Annual General Meeting (“AGM”)” and insert the name(s) of the person(s) desired. * Delete if not applicable Dated this day of 2021. NOTES : (7) The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointor or of his attorney duly authorised in writing or, if (1) The AGM of the Company will be conducted entirely through live streaming and the appointor is a corporation, either under seal or under the hand of an officer or online remote voting via Remote Participation and Voting (“RPV”) facilities. The attorney duly authorised. Company has appointed Tricor Investor & Issuing House Services Sdn Bhd as the Poll Administrator for the AGM to facilitate the RPV via TIIH Online website at https:// (8) The instrument appointing a proxy or the power of attorney or other authority, if tiih.online. The procedures for members to register, participate and vote remotely any, under which it is signed or a notarially certified copy of that power or authority via the RPV facilities are provided in the Administrative Guide for the AGM. shall be deposited at the office of the Company’s Share Registrar, Tricor Investor & Issuing House Services Sdn Bhd, at Unit 32-01, Level 32, Tower A, Vertical Business (2) Please follow the procedures set out in the Administrative Guide for the AGM which Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or its is available on the Company’s website at www.notionvtec.com to register, attend, Customer Service Centre, at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, speak (in the form of real time submission of typed texts) and vote (collectively, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than 48 hours “participate”) remotely via the RPV facilities. before the time set for holding the AGM or at any adjournment thereof. Alternatively, (3) The Broadcast Venue is strictly for the purpose of complying with Section 327(2) of the Proxy Form may also be electronically submitted via TIIH Online website at the Companies Act 2016, which requires the Chairman of the meeting to be present at https://tiih.online. Please refer to the Administrative Guide for further information the main venue. Members/proxies are NOT to be physically present at the Broadcast on electronic submission. Venue on the day of the AGM. (9) For the purpose of determining who shall be entitled to attend the AGM, the Company (4) Pursuant to Paragraph 8.29A of the Main Market Listing Requirements of Bursa shall be requesting Bursa Malaysia Depository Sdn Bhd to make available a Record Malaysia Securities Berhad, voting at the AGM will be conducted by way of poll. Poll of Depositors as at 23 February 2021 and only members whose names appear on Administrator and Independent Scrutineers will be appointed to conduct the polling such Record of Depositors shall be entitled to attend, speak and vote at the AGM process and verify the results of the poll respectively. and entitled to appoint proxy or proxies. (5) A member entitled to attend and vote at the AGM may appoint another person as Personal data privacy: his proxy to attend and vote in his stead. A proxy may but need not be a member By submitting an instrument appointing a proxy(ies) and/or representative(s), the member of the Company. If the proxy is not a member, he need not be an advocate, an accepts and agrees to the personal data privacy terms set out in the Notice of Annual General approved company auditor or a person approved by the Registrar of Companies. Meeting dated 29 January 2021. A proxy appointed to attend and vote at the AGM shall have the same rights as the member to speak at the AGM. (6) A member may appoint up to 2 proxies to attend the AGM. Where a member appoints 2 proxies, the appointment shall not be valid unless the member specifies the proportion of his shareholding to be represented by each proxy. Where a member is an exempt authorised nominee which holds shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”) as defined under the Securities Industry (Central Depositories) Act 1991, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds.
Please fold here
STAMP
THE SHARE REGISTRAR
NOTION VTEC BERHAD Registration No. 200301035125 (637546-D)
Tricor Investor & Issuing House Services Sdn Bhd Unit 32-01, Level 32, Tower A Vertical Business Suite, Avenue 3 Bangsar South, No. 8, Jalan Kerinchi 59200 Kuala Lumpur Malaysia
Please fold here fggh NOTION VTEC BERHAD Registration No. 200301035125 (637546-D)
Lot 6123, Jalan Haji Salleh, Batu 5 1/2, Jalan Meru, 41050 Klang, Selangor Darul Ehsan, Malaysia
www.notionvtec.com
www.notionvtec.com